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Traders and investors poised for today’s US employment data.

By Alex Edwards

The pound has traded a steady range against most major currencies over the last 24 hours amid a lack of any UK economic data and less Brexit headlines. There’s little by way of UK data due for release today and so focus will turn to a slew of data prints from the US, including the always much anticipated Non-Farm Payrolls.

Meanwhile, traders remain on edge for any Brexit related news. For now, cable looks well supported as we head into the end of the week, but it could just as easily be a different story come Monday, following the weekend broadsheet headlines/interviews.

The dollar pared recent gains, edging lower through trade on Thursday as investors positioned themselves ahead of Friday’s labour market data. Having touched two-week highs on Tuesday the dollar uptick stalled as investors prepare for a softening or slowdown in payroll performance. Thursday’s ADP private payroll report printed below expectations. While typically a poor leading indicator of broader labour market performance the softer read could suggest employment growth is starting to turn following a sustained and long-term upside.

Falling 2 tenths of a percent the dollar index correction was amplified by a push toward safe haven JPY and CHF as trade concerns continue to weigh on the minds of investors. While we expect investors to buy into the dip a softer labour market and wage growth print may prompt a deeper correction into the weekend.

Attentions remain squarely focused on Non-farm payroll data while trade and emerging market concerns dictate broader risk appetite demand. Markets will be keenly attuned to any announcement regarding the imposition of additional US tariffs as the period for public consultation on an additional 200bn in China trade taxes ends today.

The euro traded within a tight range for most of Thursday with little to excite investors on the domestic calendar. It remains relatively unchanged ahead of President Trump’s widely expected announcement of $200bn tariff on China.

The market remains relatively skittish this week as the risk-off environment continues to dominate market sentiment. Looming over market movements is the on-going US-China trade war which will potentially escalate further today leaving the euro in a holding pattern ahead of this news. Supporting the euro within this context was a poor US non-farm employment reading with 163,000 jobs added against the expected 190,000, which saw the USD depreciate marginally against a number of currencies, including the single currency.

The Australian dollar has fallen steadily through the last 12/24 hours, not helped by news that Australian banks ANZ, and then CBA announced they’d follow Westpac and increase their mortgage rates.

The risk-off environment, as President Trump looks to impose $200bn worth of Tariffs on China, hasn’t helped either. The public consultation period comes to a close shortly with the market widely expecting the additional tariffs to be announced.

The USD/CAD pair touched its highest level since July 20 at 1.3225 yesterday on the back of a sharp fall seen in crude oil prices. On the data front yesterday we saw the release of Building Permits for the month of July which came in down 0.1% in June. The value of permits for residential buildings edged down 0.3% to $5.3 billion in July. The decline was mainly the result of lower construction intentions for multi-family dwellings, down 1.1% to $2.9 billion.

Later in the day yesterday, the Bank of Canada’s Wilkins then made the headlines by saying that the central bank had “discussed whether the gradual approach to raising rates that we have been taking over the past year remains appropriate…… It is a natural question to ask, given that the economy has been operating at potential for the past year and it is in this part of the cycle when interest rates typically rise to pre-empt a buildup in inflation pressures." The CAD gapped higher on the news sending USD/CAD back under 1.32. It fell to a low of 1.3115 overnight, helped along the way too by some fairly conciliatory comments from President Trump who said he thought that Canada would be part of NAFTA.

Looking ahead today and all eyes will be on the Unemployment Rate – markets are expecting to see a rise from 5.8% to 5.9%.

NZD/USD has again tracked its cousin, the AUD/USD, over the last 24 hours. The resignation of an NZ minister, and the subsequent statement from NZ PM Arden that “the government is stable” received somewhat of a cynical reaction in markets and weighed a little on the kiwi.