All Eyes On US Jobs Report As Dollar Strengthens Against Sterling And Euro

Global equity markets rallied on Thursday as investors responded positively to the news that China was cutting tariffs on over 1,700 US products. This follows last month’s signing of the Phase 1 trade deal which will also see the US reduce tariffs by half on a number of goods on the 14th February. A reciprocal move which may have been planned in advance but the timing of the announcement and the further easing of trade tensions was welcomed given the concerns surrounding the effect of the coronavirus on the global economy.

Financial markets in general have been extremely volatile since the outbreak of the virus. Commodities, equities, bonds and currencies have all been experiencing risk on/ risk off flow as the situation develops and sentiment shifts as to its potential impact.

For currencies the greenback was the winner yesterday. Along with the positive trade news weekly jobless claims were confirmed at a nine-month low in the US and worker productivity for the last quarter had its strongest increase since 2010.

Against the pound we have seen what looks like a clear break below 1.30 in the last 24 hours. There has been some support for Sterling at this level for a few weeks now but with the UK and EU seemingly worlds apart on trade, investors have little reason to buy the pound and there is a real risk of a move lower. At the time of writing 1.2930.

Against the euro the dollar strengthened to a four-month high breaking below the 1.10 level with German Factory Orders surprisingly posting their biggest fall in nearly a year. German Industrial Production has already been released this morning at a disappointing -3.5%, the worst reading since October 2014. At the time of writing EUR/USD is at 1.0966.

GBP/EUR is currently trading at 1.1790 with 1.1764 (EUR/GBP 0.85) the level to watch.

US employment figures are released today at 1:30pm. As the euro and sterling tests new lower trading ranges the jobs report from the states will be critical today to determine where these currency pairs close for the week and whether these newer lows become established.

The figures are based on the live mid-market rate, correct as of 08:30 GMT on 07/02/2020, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.

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