Forex Today: January Nonfarm Payrolls data to trigger next big market reaction

Here is what you need to know on Friday, February 7:

The trading action in financial markets turns subdued early Friday as investors move to the sidelines ahead of key macroeconomic data releases. The US Bureau of Labor Statistics will publish January employment report, which will feature Nonfarm Payrolls, Unemployment Rate and wage inflation figures. Labor market data from Canada and comments from central bank officials will also be watched closely by participants.

Related news

  • Nonfarm Payrolls forecast: US job growth expected to slow in January amid Fed uncertainty
  • What is NFP and how does it affect the Forex market?
  • US January Nonfarm Payrolls Preview: Analyzing Gold price reaction to NFP surprises

The US Dollar (USD) Index closed marginally higher on Thursday, supported by the cautious market stance. In the European morning on Friday, the index fluctuates in a narrow range below 108.00. Nonfarm Payrolls in the US are forecast to rise by 170,000 and the Unemployment Rate is seen holding steady at 4.1% in January.

US Dollar PRICE This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Canadian Dollar.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.11% -0.23% -2.02% -2.60% -1.15% -1.43% -0.98%
EUR 0.11% 0.28% -0.63% -1.21% -0.58% -0.03% 0.42%
GBP 0.23% -0.28% -1.98% -1.49% -0.85% -0.31% 0.15%
JPY 2.02% 0.63% 1.98% -0.58% 1.05% 1.53% 1.70%
CAD 2.60% 1.21% 1.49% 0.58% 0.39% 1.20% 1.66%
AUD 1.15% 0.58% 0.85% -1.05% -0.39% 0.55% 1.01%
NZD 1.43% 0.03% 0.31% -1.53% -1.20% -0.55% 0.45%
CHF 0.98% -0.42% -0.15% -1.70% -1.66% -1.01% -0.45%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

 

Mexico’s central bank, the Banco de Mexico (Banxico), announced late Thursday that it lowered interest rates by 50 basis points (bps), as anticipated. The decision, however, was not unanimous as Deputy Governor Jonathan Heath voted for a 25 bps rate cut. USD/MXN edged lower and closed in negative territory on Thursday before stabilizing slightly above 20.45 on Friday.

EUR/USD snapped a three-day winning streak on Thursday, pressured by the broad USD resilience. Early Friday, the pair trades sideways below 1.0400. European Central Bank Vice President Luis de Guindos is scheduled to speak later in the European session.

The Bank of England lowered the policy rate by 25 bps to 4.5% after the February meeting, in a widely expected decision. Policymakers voted 7-2 in favor of the 25 bps cut. External Monetary Policy Committee (MPC) members Dhingra and Mann voted to cut rates by 50 bps. In the post-meeting press conference, “we expect to be able to cut bank rate further but we will have to judge meeting by meeting how far and how fast,” BoE Governor Andrew Bailey said. GBP/USD lost more than 0.5% on Thursday but managed to stabilize above 1.2400 early Friday.

Nada Choueiri, Deputy Director of the International Monetary Fund’s (IMF) Asia-Pacific Department and its mission chief for Japan, said on Friday that the Bank of Japan (BoJ) is likely to raise interest rates again this year. USD/JPY extended its weekly slide and touched its lowest level in nearly two months near 151.00 in the Asian session on Friday. The pair stages a rebound in the European morning and trades in positive territory above 151.50.

USD/CAD fluctuated in a narrow channel on Thursday and closed the day virtually unchanged. The pair struggles to find direction early Friday and moves up and down in a tight range above 1.4300. The Unemployment Rate in Canada is forecast to tick up to 6.8% from 6.7%.

Gold corrected lower on Thursday following a five-day rally that saw the price hit a record-high above $2,880 on Wednesday. XAU/USD stays relatively calm early Friday and trades near $2,860.

Nonfarm Payrolls FAQs

Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.

The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.

Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.

Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.

Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.

By |2025-02-10T05:57:14+05:30February 10, 2025 5:57 am|Forex|Comments Off on Forex Today: January Nonfarm Payrolls data to trigger next big market reaction
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NZD/USD softens below 0.5700 ahead of US NFP release

  • NZD/USD weakens to around 0.5670 in Friday’s early European session. 
  • The renewed trade war between the US and China spurs safe-haven demand and weighs on the China-proxy Kiwi. 
  • The US January NFP report will be in the spotlight later on Friday. 

The NZD/USD pair trades in a negative territory near 0.5670 during the early European trading hours on Friday, pressured by a modest rebound of the US Dollar (USD). Traders prefer to wait on the sidelines amid the uncertainty ahead of key US Nonfarm Payrolls (NFP) data.

Following China’s measured retaliation to US tariffs, President Donald Trump has said that he is not in a rush to talk with Chinese President Xi Jinping. On Tuesday, China’s finance ministry issued a package of tariffs on a variety of US items, including crude oil, agricultural equipment, and certain automobiles, in response to US President Donald Trump’s announcement of a 10% tariff on Chinese imports. Any signs of rising trade war tensions between the US and China could exert some selling pressure on the New Zealand Dollar (NZD), as China is a major trading partner to New Zealand.

The US Federal Reserve (Fed) signaled that it had no plans to cut interest rates quickly, amid uncertainty over sticky inflation and Trump’s policies. All eyes will be on the highly-anticipated US Nonfarm Payrolls on Friday for more cues about the US interest rate outlook. In case of a weaker-than-expected outcome, this could drag the USD lower broadly. Economists expect the US economy to have added around 170,000 jobs in January, while the unemployment rate is estimated to hold steady at 4.1%.

New Zealand Dollar FAQs

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.

By |2025-02-10T05:54:59+05:30February 10, 2025 5:54 am|Forex|Comments Off on NZD/USD softens below 0.5700 ahead of US NFP release
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Pound Sterling flattens against USD ahead of US NFP

  • The Pound Sterling edges lower to near 1.2420 against the USD ahead of the US NFP data for January.
  • Investors expect the US NFP to drive market expectations for the Fed’s monetary policy outlook.
  • BoE’s Catherine Mann surprisingly supported a bigger interest rate reduction of 50 bps.

The Pound Sterling (GBP) ticks lower to near 1.2420 against the US Dollar (USD) in Friday’s European session ahead of the United States (US) Nonfarm Payrolls (NFP) data for January, which will be published at 13:30 GMT. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks higher to near 107.80

Investors will pay close attention to the US official employment data, which is expected to influence market speculation about how long the Federal Reserve (Fed) will keep interest rates steady in the range of 4.25%-4.50%.

On Thursday, Dallas Fed Bank President Lorie Logan said she would support holding interest rates for “quite some time” until the “labor market doesn’t falter” even if inflationary pressures decelerate closer to the central bank’s target of 2%.

Last week, Fed Chair Jerome Powell also said that monetary policy adjustments won’t be appropriate until the central bank sees “real progress in inflation or at least some weakness in labor market”.

The US NFP report is expected to show that the economy added 170K workers in January, significantly lower than 256K in December. The Unemployment Rate is seen steady at 4.1%. Investors will also focus on the Average Hourly Earnings data, a key measure of wage growth that drives consumer spending. The wage growth measure is estimated to have decelerated to 3.8% year-on-year from 3.9% in December, with monthly figures growing steadily by 0.3%.

Meanwhile, the uncertainty over US President Donald Trump’s tariff agenda will also keep investors on their toes. Market participants expect President Trump to target Europe next for imposing tariffs.

Daily digest market movers: Pound Sterling trades with caution as BoE halves GDP forecasts

  • The Pound Sterling trades cautiously against its major peers on Friday after a sharp sell-off on Thursday. Investors dumped the British currency the prior day after the Bank of England’s (BoE) policy meeting, in which the central bank reduced interest rates by 25 basis points (bps) to 4.5% and revised Gross Domestic Product (GDP) forecast for the year to 0.75%, lower from 1.5% projected in November.
  • Investors had anticipated a 25 bps interest rate reduction, with an 8-1 vote split, but all officials supported easing the monetary policy further. However, the notable reason behind the sharp sell-off in the Pound Sterling was Monetary Policy Committee (MPC) member Catherine Mann, an outspoken hawk, joining official Swati Dhingra and favoring a bigger rate cut of 50 bps. This scenario indicated how much policymakers are concerned over the economic outlook.
  • BoE Governor Andrew Bailey guided a cautious and gradual rate cut approach and warned that, due to higher energy prices, inflation could temporarily rise to near 3.7% in the third quarter of the year before falling back to the 2% path.
  • BoE’s interest rate cut decision is expected to bring a big relief to the United Kingdom (UK) Chancellor of the Exchequer Rache Reeves, as it will stimulate economic growth. Still, downwardly revised GDP growth appears to be a wake-up call for her. Last week, Reeves was very optimistic about her economic plans, including a new runway at Heathrow Airport.

Technical Analysis: Pound Sterling trades inside Thursday’s trading range

By |2025-02-10T05:53:17+05:30February 10, 2025 5:53 am|Forex|Comments Off on Pound Sterling flattens against USD ahead of US NFP
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NZD/USD holds ground near 0.5700 ahead of US NFP

  • NZD/USD remains steady as traders adopt caution ahead of the US Nonfarm Payrolls release on Friday.
  • The US Dollar extends its recovery amid rebounding US Treasury yields.
  • The risk-sensitive NZD struggled as heightened risk aversion grew amid global trade and economic uncertainties.

NZD/USD remains steady after registering losses in the previous session, trading around 0.5680 during the European hours on Friday. The pair remains silent as sentiment turns cautious ahead of a key US jobs report. Traders brace for Friday’s US Nonfarm Payrolls (NFP) data, which is expected to shape the Federal Reserve’s (Fed) monetary policy direction.

The NZD/USD pair may face pressure as the US Dollar (USD) extends its recovery, supported by rebounding US Treasury yields. The US Dollar Index (DXY) has risen toward 107.70, while the 2-year and 10-year US Treasury yields stand at 4.22% and 4.44%, respectively, at the time of writing.

On the data front, US Initial Jobless Claims rose to 219K for the week ending January 31, as reported by the US Department of Labor (DoL) on Thursday. This print surpasses initial estimates of 213K and was higher than the previous week’s revised tally of 208K (from 207K).

The risk-sensitive New Zealand Dollar (NZD) struggled amid heightened risk aversion due to global trade and economic uncertainties. However, trade negotiations between the United States (US) and China could temper this sentiment. US President Donald Trump and Chinese President Xi Jinping are set to discuss potential tariff rollbacks.

The Kiwi Dollar could face headwinds as the Reserve Bank of New Zealand (RBNZ) is widely expected to cut interest rates in February. Markets are currently pricing in a nearly 92% chance of a 50 basis-point cut to 3.75% on February 19, marking the third consecutive jumbo rate reduction.

New Zealand Dollar FAQs

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.

By |2025-02-09T16:45:27+05:30February 9, 2025 4:45 pm|Forex|Comments Off on NZD/USD holds ground near 0.5700 ahead of US NFP
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USD/CAD consolidates in a range around 1.4300 ahead of US/Canadian jobs data

  • USD/CAD struggles for a firm near-term direction and oscillates in a range on Friday. 
  • Fed rate cut bets keep the US bond yields and the USD depressed, capping the pair.
  • Rebounding Oil prices underpin the Loonie and also act as headwind for the major.
  • Traders further seem reluctant ahead of the crucial US/Canadian monthly jobs report.

The USD/CAD pair extends its sideways consolidative price move for the third straight day and remains confined in a narrow trading band around the 1.4300 mark through the first half of the European session on Friday. Spot prices, however, manage to hold above the 1.4260 area, or the year-to-date (YTD) low retested on Wednesday, as traders await monthly employment details from the US and Canada before placing fresh directional bets.

The popularly known US Nonfarm Payrolls (NFP) report will influence market expectations about the Federal Reserve’s (Fed) interest rate outlook and play a key role in driving the US Dollar (USD) demand. This is likely to overshadow Canadian jobs data and provide some meaningful impetus to the USD/CAD pair. In the meantime, bets that the Fed will stick to its easing bias keep the USD bulls on the defensive and act as a headwind for spot prices.

In fact, the markets are pricing in the possibility that the US central bank would lower borrowing costs twice by the end of this year. This keeps the US Treasury bond yields depressed near their lowest level since December and weighs on the USD. Apart from this, a goodish recovery in Crude Oil prices from over a one-month low underpins the commodity-linked Loonie and further contributes to capping the upside for the USD/CAD pair.

Meanwhile, investors now seem to have digested US President Donald Trump’s recent decision to delay 25% trade tariffs against Canada and Mexico. Apart from this, the Bank of Canada’s (BoC) dovish outlook might hold back traders from placing bullish bets around the Canadian Dollar (CAD). This warrants caution before positioning for an extension of the USD/CAD pair’s sharp pullback from over a two-decade high touched earlier this week.

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months’ reviews ​and the Unemployment Rate are as relevant as the headline figure. The market’s reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Read more.

Next release: Fri Feb 07, 2025 13:30

Frequency: Monthly

Consensus: 170K

Previous: 256K

Source: US Bureau of Labor Statistics

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

By |2025-02-09T16:43:56+05:30February 9, 2025 4:43 pm|Forex|Comments Off on USD/CAD consolidates in a range around 1.4300 ahead of US/Canadian jobs data
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EUR/USD: Price movements are likely part of a range trading phase – UOB Group

Current price movements are likely part of a range trading phase, probably between 1.0355 and 1.0415. In the longer run, outlook is unclear; EUR could trade in a broad range of 1.0250/1.0490 for the time being, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

EUR can trade in a broad range of 1.0250/1.0490

24-HOUR VIEW: “EUR rose to 1.0442 on Wednesday and then pulled back. Yesterday (Thursday), we highlighted that ‘the pullback in overbought conditions and slowing momentum suggest that instead of continuing to rise, EUR is likely to trade between 1.0360 and 1.0430’. EUR then traded in a lower and narrower range of 1.0350/1.0406, closing lower by 0.20% at 1.0381 (-0.20%). The current price movements are likely part of a range trading phase, probably between 1.0355 and 1.0415.”

1-3 WEEKS VIEW: “Our most recent narrative was from two days ago (05 Feb, spot at 1.0375), wherein “the outlook is unclear for now, and EUR could trade in a broad range of 1.0250/1.0490 for the time being.” We continue to hold the same view.”

By |2025-02-09T16:42:04+05:30February 9, 2025 4:42 pm|Forex|Comments Off on EUR/USD: Price movements are likely part of a range trading phase – UOB Group
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EUR/USD wobbles ahead of US NFP report

  • EUR/USD trades broadly sideways around 1.0400 as investors await the US NFP data for January.
  • The Fed is expected to cut interest rates in the June policy meeting.
  • ECB’s Cipollone expects the impact of tariffs on China to be deflationary for the Eurozone.

EUR/USD steadies in a tight range around 1.0400 in Friday’s European session as the US Dollar (USD) trades cautiously ahead of the United States (US) Nonfarm Payrolls (NFP) data for January, which will be published at 13:30 GMT. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks lower to near 107.60.

Economists expect the US economy to have added 170K workers, fewer than 256K in December. The Unemployment Rate is estimated to have remained steady at 4.1%. The official employment data is expected to drive market speculation about how long the Federal Reserve (Fed) will hold interest rates at their current levels.

Signs of a strong labor market would boost expectations that the Fed will remain in the waiting mode regarding interest rates for longer. On the contrary, soft numbers would stimulate Fed dovish bets. According to the CME FedWatch tool, the Fed is expected to announce its next interest rate cut in the June policy meeting.

Last week, Fed Chair Jerome Powell said the central bank would make monetary policy adjustments only after seeing “real progress in inflation or at least some weakness in labor market” after the Fed left interest rates unchanged in the range of 4.25%-4.50%.

Investors will also pay close attention to the Average Hourly Earnings data, which is a key measure of wage growth that drives consumer spending. The wage growth measure is estimated to have decelerated to 3.8% year-on-year from 3.9% in December. In the month, Average Hourly Earnings are expected to have grown steadily by 0.3%.

Daily digest market movers: EUR/USD steadies while Euro’s outlook remains uncertain

  • EUR/USD seems steady at around 1.0400, but the outlook for the Euro (EUR) remains uncertain amid concerns that the Eurozone is likely to feel the pain of higher tariffs by US President Donald Trump. Last weekend, President Trump warned that Europe will definitely face tariffs for not buying enough American goods, but didn’t provide much information.
  • Analysts at Macquarie said President Trump held back specific tariff threats on the Eurozone because of “the lack of a stable government in Germany and France.” Still, they warned that a US tariff bomb would likely find “fertile ground in the EU” and escalate unresolved issues rapidly into trade tensions, given that “Europe is target-rich”.
  • In addition to global issues, the Eurozone outlook is also vulnerable because of domestic concerns. Growing risks of economic uncertainty have forced European Central Bank (ECB) officials to guide a dovish monetary policy outlook. ECB’s executive board member Piero Cipollone said in an interview with Reuters on Thursday that all officials agree “there is still room for adjusting rates downwards”.
  • When asked about the impact of President Trump’s tariffs on the Eurozone, Cipollone said, “If tariffs are imposed on us, the most immediate impact will be on growth”. He also added that tariffs on China would compel it to look to the shared bloc for dumping its goods due to tariffs from the US. Such a scenario will be deflationary for the economy.

Technical Analysis: EUR/USD stays below 50-day EMA

By |2025-02-09T16:39:16+05:30February 9, 2025 4:39 pm|Forex|Comments Off on EUR/USD wobbles ahead of US NFP report
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EUR: A hawkish r-star? – ING

The European Central Bank will publish its staff revision on the neutral rate today, ING’s FX analysts Francesco Pesole notes.

EUR/USD to retest the 1.044 Wednesday highs

“President Christine Lagarde said last week that r-star is ‘a range that does not give a guideline or a destination’ and Olli Rehn added yesterday that ‘we should not constrain our freedom of action because of a theoretical concept’.”

“That said, with the next couple of cuts not particularly up for debate, a lot of the action in pricing is focused on the terminal rate. The scope and timing of US tariffs would have a big say, but while markets await Trump’s move on the EU, today’s report is all markets will get in terms of terminal rate guidance, and we expect a euro reaction.”

“Based on Rehn’s comments and the fact that r-star projections are model-based (i.e. embedding significantly higher inflation than in the past), our best guess is that today’s note will show a relatively high rate and send a hawkish signal. When adding downside risks for US payrolls, we favour a new leg higher in EUR/USD to retest the 1.044 Wednesday highs.”

By |2025-02-09T16:38:04+05:30February 9, 2025 4:38 pm|Forex|Comments Off on EUR: A hawkish r-star? – ING
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GBP/USD: Likely to trade in a 1.2310/1.2550 range – UOB Group

Outlook is mixed; GBP could trade between 1.2390 and 1.2500. In the longer run, for the time being, GBP is likely to trade in a 1.2310/1.2550 range, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

GBP cad continue to trade in a choppy manne

24-HOUR VIEW: “Yesterday, we expected GBP to ‘consolidate in a 1.2460/1.2540 range.’ Our expectation was incorrect, as GBP plummeted to 1.2361 before rebounding strongly to close at 1.2438 (-0.54%). The price action has resulted in a mixed outlook. Today, GBP could continue to trade in a choppy manner, likely between 1.2390 and 1.2500.”

1-3 WEEKS VIEW: “Following GBP rise to 1.2550 two days ago, we indicated yesterday (06 Feb, spot at 1.2505) that ‘upward momentum is increasing, but not enough to suggest a sustained advance.’ We added, ‘for a sustained advance, GBP has to break and remain above 1.2550.’ Yesterday, GBP plummeted to a low of 1.2361. The breach of our ‘strong support’ level of 1.2370 indicates that the buildup in momentum has faded. To put it another way, GBP is not ready to break above 1.2550. For the time being, it is likely to trade in a 1.2310/1.2550 range.”

By |2025-02-09T16:37:10+05:30February 9, 2025 4:37 pm|Forex|Comments Off on GBP/USD: Likely to trade in a 1.2310/1.2550 range – UOB Group
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USD: Annual revisions may be big – ING

The US Dollar’s (USD) bearish momentum has eased into today’s US jobs release. Most of the tariff shock from last weekend has been absorbed, and markets are also probably reconsidering the optimism on a US-China deal. Beijing’s retaliatory tariffs are due to come into effect on Monday, and the chances of a de-escalation before then have decreased. Also helping the dollar were some comments by Treasury Secretary Scott Bessent, who said the strong dollar policy remains in place, ING’s FX analysts Francesco Pesole notes.

A move to 107.0 in DXY is warranted

“The biggest driver for FX should be US payroll figures for January. The consensus is for a slowdown from 256k to 175k, but our estimate is closer to 160k. A lot of focus will be on annual benchmark revisions.”

“Last year’s provisional revisions indicated that, upon cross-referencing with tax data, the Bureau of Labor Statistics had overestimated job creation by approximately one-third. This points to significant issues with their model, and we anticipate substantial adjustments to the monthly payroll numbers.”

“So, despite some support potentially coming from souring sentiment on China, we have a negative bias on the dollar today. Markets are pricing in 43bp of easing by year-end and there is room for a dovish repricing on the back of softer economic data. A move to 107.0 in DXY is warranted.”

By |2025-02-09T16:36:32+05:30February 9, 2025 4:36 pm|Forex|Comments Off on USD: Annual revisions may be big – ING
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Sudhakar. Kalyan

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