Traders Sidelined Ahead of NFP by Korman Tam
Traders took to the sidelines ahead of the key US jobs data later in the session, with the major currency pairs consolidating within range. The greenback remains buoyed against the majors, benefiting from continued safe-haven flows amid steep drops in global equity bourses. The Dow Jones breached key support levels, plunging by over 4% to close at a level not seen since 1997 while the NASDAQ and S&P 500 also plummeted by over 4%. Tokyo’s Nikkei average is trading sharply lower by mid-session Asian trading, down by over 3%.
The dire global economic recession was underlined by rate cuts from the ECB and Bo E to record lows yesterday, with both slashing its benchmark lending rate by 50-basis points to 1.50% and 0.50%, respectively. Euro zone Q4 GDP was largely inline with expectations, contracting by 1.5% q/q and 1.3% y/y.
In the coming session, markets will closely scrutinize the US February labor report. The unemployment rate is expected to spike to 7.9%, a level not seen since 1984 and up sharply from 7.6% from January. The non-farm payrolls figure is estimated to reveal a loss of 600k jobs – its worse level since 1974. While a dismal jobs report has largely been priced in by the markets, a non-farm payrolls loss on the scale of 650k or greater – its largest in over 60-years, will prompt another bout of sharp selling in US equities and prop the dollar higher against the majors.
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The Pound fell to 1.3997 on a weaker than expected Australian GDP release which reignited concerns over global growth. However, positive equity markets, an improvement in consumer confidence and a better than expected PMI service print has helped Sterling reverse earlier loss and looking to test 1.4100.
Talking Points
• Japanese Yen: Finds Resistance At 99.50
• Pound: Consumer Confidence, Service Sector Improve
• Euro: PMI Services Improves
• US Dollar: ADP an ISM No-Manufacturing On Tap
Pound Pares Earlier Losses As Services Sector and Consumer Confidence Improves, Will BoE Cut Rates?
The Pound fell to 1.3997 on a weaker than expected Australian GDP release which reignited concerns over global growth. However, positive equity markets, an improvement in consumer confidence and a better than expected PMI service print has helped Sterling reverse earlier loss and looking to test 1.4100. As we wrote yesterday the former support level is now providing resistance for the GBP/USD and a break above that level could lead to more pound gains. The February Nationwide consumer confidence report improved for the first time in five months to 43 from 38. Meanwhile, the U.K. service sector improved for a third straight month to 43.2 from 42.5, but remains well below the boom/bust level of 50. More Details...........
