Established in 1974
185,800 clients worldwide
Over 15,000 markets

US dollar steady ahead of jobs report

The dollar is broadly unchanged versus the euro and the pound as all eyes are on non-farm payrolls at 1.30pm (London time). 

A pound and a US dollar note
Source: Bloomberg

GBP/USD hovers around $1.51

The pound has managed to stem its losses versus the dollar in the overnight session, and the downward trend has begun to plateau. I would imagine that trading volumes and market volatility will remain low as we approach the jobs report.

The UK manufacturing production report will be announced at 9.30am (London time), and the consensus is for an increase of 0.4% in November. The October survey showed a contraction of 0.7%. The British manufacturing sector accounts for a much smaller portion of the economy than the services sector, but it could trigger some interest for traders.

As Brenda Kelly stated, dealers are expecting a reading of 240,000 from the non-farm payrolls, and for the unemployment rate to drop to 5.7%. Signs that the US recovery is continuing will drive the greenback higher. 

GBP/USD is encountering resistance at the 50-hour moving average of $1.5094, and a move through this will put $1.52 in traders’ minds. The downside bias is still in place and $1.50 is on the bears' radar. 

Spot FX GBP/USD chart

EUR/USD still struggling

The slide in the euro is showing no sign of letting up, and the worse-than-expected industrial production figures from Germany and France this morning have only added to the single currency’s problems. The contraction in the eurozone CPI on Wednesday sent the QE speculation into overdrive, and it is going to intensify as we approach the European Central Bank meeting in less than two weeks.

As Alastair McCaig stated, the possibility of Greece exiting the currency union is still on the agenda, but this has taken a back seat for now. The Greek election will take place on 25 January and the latest polls put the anti-austerity Syriza party in first place, but its lead in narrowing.

The 50-hour moving average of $1.1814 is likely to act as resistance, and even if it is cleared $1.19 will be the next barrier. If the recent low of $1.1754 is breached it will put $1.17 in the crosshairs.

Benda Kelly is hosting a webinar covering the non-farm payrolls which starts at 12.45pm (London time). 

Spot FX EUR/USD chart

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts