Dollar soars on blowout US jobs report
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Daily Currency Update
GBP/USD plunged on Friday as the January US jobs report came in better than expected. Making the headline, the Non-Farm Payrolls figure showed an extra 353k people were added to the workforce last month, this figure was a surprise as it roughly doubled the median estimate.December’s non-farm payroll number also saw a sizeable upward revision, elevating to 333k from 216k showing the ongoing resilience of the US labour markets despite the forcible headwinds caused by two years of above-target inflation and aggressive interest rate tightening to try and control these price rises.
GBP/USD dropped from around 1.2750 to a low of 1.2630 in the aftermath as the dollar soared across the board. The dollar’s advance has continued in early trade this morning with GBP/USD briefly dipping below 1.26 before it pared some of its gains.
It looks like a relatively quiet week for UK data except for tomorrow's monthly Construction PMI, the only note release. GBP/EUR continues to trade in recent ranges around the 1.17 level.
Key Movers
EUR/USD mirrored GBP/USD’s fall on the back of the US jobs data with the pair dropping from close to 1.09 to around 1.0780 by the end of trading on Friday.Accompanying the NFP number was evidence of continued strong wage growth in the US. This combined with US inflation unexpectedly ticking higher last month seems to have packed in the idea that the Federal Reserve may start cutting interest rates in March.
EUR/USD has slipped a little more this morning heading towards 1.0750 as markets continue to digest the employment data. The European Central Bank now seems favoured to be the first to cut rates given the bloc's anemic economic performance of late.
Today the US ISM Services PMI is due at 3 pm. Several US monetary policymakers are speaking this week so we should expect to hear their thoughts on the stellar jobs print and what it could potentially mean for the future path of US interest rates. There is little data of note from the Eurozone so FX moves will likely be driven by events on other side of the Atlantic.
Expected Ranges
- GBP/USD: 1.2585 - 1.2700 ▼
- GBP/EUR: 1.1670 - 1.1745 ▲
- GBP/AUD: 1.9320 - 1.9445 ▲
- EUR/USD: 1.0730 - 1.0860 ▼