Currencies wait for non-farms chaos

A lull in events in Greece ensures that today’s focus is fully on the US non-farm payrolls data.

GBP/USD
Source: Bloomberg

Quiet day in Greece allows for non-farm payrolls focus
Trying to second guess what the Greek Syriza party will do next is a fool’s game, so most currency traders will welcome the momentary lull in developments ahead of this weekend’s referendum. This offers the perfect opportunity to fully focus on the release of today’s US non-farm payrolls figures coming out a day early due to Friday’s US bank holiday in lieu of Saturday’s 4th of July celebrations.

Last month saw 280,000 jobs created and expectations are that we will see 231,000 created this month. This could be one of the more useful tools in assessing how much effect the current stagnation in the eurozone is having on the US economy.

The current levels in EUR/USD, just above $1.1000, have previously seen support materialise, but with so much uncertainty hanging over the Euro side of the equation this might not necessarily be relied upon.

Markets try to gauge impact of Greek fiasco on UK recovery
Yesterday saw the Bank of England governor Mark Carney talk after the release of the latest Financial Stability Report. Much like the rest of the markets there was a strong sub plot to his comments revolving around Greece. Both Mr Carney and his colleagues have seen a slowing of the UK recovery as fears over current developments in Europe dampen investment enthusiasm and impact UK data releases. The issues that have hung over the UK are similar to those that have cooled expectations in the US, however being geographically and fiscally closer have had more of an impact.

Cynics will suggest that the initial GBP/USD reaction we see on the back of today’s non-farm payrolls data will be the wrong one but what the FX markets will be looking to gauge is the gap between the pace of the US recovery and the pace of the UK recovery growing or shrinking.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.