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.
The data showed the US added 195,000 jobs versus expectations of around 165,000. Analysts now feel the Fed is on course for September tapering as some of the ones who were still looking for tapering later in the year, like Goldman Sachs (which had pinned it for December), have since revised this to September.
The US dollar index jumped to a high of 84.59 and looks like it is headed to 85 in the near term. This resulted in a selloff for the risk currency pairs with AUD/USD dropping to around 0.905 and EUR/USD to 1.281.
There’s a big day for Europe ahead with Mario Draghi on the wires and Eurogroup meetings. There is also the German trade balance and industrial production readings to look out for. After Mario Draghi made some dovish comments about monetary policy going forward last week, the single currency is likely to remain under pressure in the near term.
AUD/USD continues to look bearish but we expect to see some buying interest in the 0.9 region. We would only look at selling the pair on strength as opposed to a momentum play at the moment. We highlighted this last week and the price action continues to look good for sterling bears. After the strong US payrolls report on Friday, GBP/USD fell to a low of 1.4856, although rallied a touch into the close.
All eyes now fall on the March 12 low of 1.4831, where a closing break would see the pair head lower, even though it has fallen 5.5% since the recent high on June 17. We continue to feel traders will sell rallies.