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US Non-farm Payrolls show 100K new jobs

Published on 9 February 2017 in News - Pages by Raffick Marday

Pound Sterling

The Bank of England chose not to make any changes to their current monetary policy scheme, they left the benchmark interest rate at 0.50% and did not make any alterations to the current asset purchasing target of £375 billion.

Sterling was largely unaffected by the data as it was generally in line with market expectations. However, the Pound did find itself rallying slightly in the aftermath of the decision in relief that it was not subjected to any further inflationary devaluation in the form of quantitative easing. The Pound to Euro exchange rate rose by 0.8 cents on the day as risk appetite gave way to risk aversion.

The Pound is currently trading in the region of 1.2750 against the Euro and 1.5505 against the US Dollar.

US Dollar

The US Dollar has appreciated by over 1.5 cents against the Euro as risk aversion trends have begun to claim back the losses that the Dollar suffered this week at the hands of inflated risk appetite. The US Dollar has also appreciated by around 1.6 cents against the Pound in reaction to the European Central Bank's lacklustre policy statement.

Later today US Non-farm Payrolls are expected to show that 100K new jobs were added in July which should be enough to support the US economy, but not enough to bring about a return to risk-on trading.

Currently, the Dollar is trading is trading in the region of 0.8223 against the Euro and 0.6450 against the British Pound.

The Euro

The Euro plummeted against the US Dollar and also lost ground to the British Pound as the ECB decided to maintain their benchmark interest rate of 0.75% and Mario Draghi could not offer a concrete start date for his proposed bond-buying programme.

Draghi attempted to back-up his comments from last week 'to do whatever it takes to preserve the Euro,' with the ECB's new scheme whereby embattled sovereigns will be able to request help from the Central Bank to kerb their bond yield curves. However, investors were not impressed by the fact that in order to qualify for the assistance nations will have to surrender sovereignty, to an extent, and sign up for strict fiscal tightening measures a la a bailout package.

Markets were especially downbeat towards the scheme as it appears to be at the infant stage of planning and could take a long time to come into effect. The hyped-up risk appetite rallies of this week demanded an immediate solution if they were to persist in carrying the single currency higher.

The Euro is currently trading in the region of 1.2160 against the US Dollar and 0.7844 against the British Pound.

Australian Dollar

On the day the Australian Dollar was 0.3 cents down to the US Dollar. The Australian Dollar rose against the US Dollar during the afternoon in anticipation of a strong statement from Mario Draghi but the rally fizzled out as the ECB's President did not have anything substantial to offer risk sentiment. Although the reversal has not been too aggressive, it is likely that over the coming days the Australian Dollar will give back more of its recent gains to the US Dollar.

Currently, the ‘Aussie’ is trading in the region of 0.6741 against the British Pound, 0.8594 against the Euro and 1.0450 against the US Dollar.

New Zealand Dollar

Once more the New Zealand Dollar is not the gift of the kind of Central Bank stimulus that would really pave the way to a strong 'Kiwi' rally. The New Zealand Dollar has fallen slightly against both the US Dollar and the Pound as risk sentiment was turned to risk aversion in the blink of an eye following Mario Draghi's uninspiring press conference.

Currently, the New Zealand Dollar is trading in the region of 0.5224 against the Pound, 0.8122 against the US Dollar and 0.6609 against the Euro.

Canadian Dollar

The Canadian Dollar is trading around 0.4 cents lower against the US Dollar in the aftermath of the ECB's decision to leave interest rates unchanged, and leave pretty much everything else unchanged too. Whilst markets had hoped for a decisive plan, all Draghi could do was give a speculative proposal for how the ECB's bond-buying scheme may work in the future. This allowed the US Dollar to benefit the Canadian Dollar by absorbing risk aversion funds.

The perceived domestic weaknesses of both the Eurozone and the UK ensured that the Canadian Dollar's recent performances against both currencies were not erased just because the winds of risk happened to change direction.

Currently, the ‘Loonie’ is trading in the region of 0.9926 against the US Dollar, 0.8166 against the Euro and 0.6402 against the British Pound

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