Following Friday’s latest ICBM test, North Korea said that it is a stern warning to the US adding that it has proved its ability to strike the US mainland. In response, the US flew two B-1B bombers over the Korean peninsula, while Nikki Haley, the US Ambassador to the UN, said there is no point in having an emergency session of the United Nations Security Council if it produces nothing of consequence. Meanwhile, US President Trump tweeted “I am very disappointed in China”.
Eurozone inflation and unemployment data are marked for release today at 10:00, expectations are for prices to have risen by 1.3% on an annualised basis and the unemployment rate to have fallen from 9.3% to 9.2%. The Euro has benefited of late, as market participants start to factor in a tightening of monetary policy by the ECB. The single currency has already broken out of its longer-term range on the upside against the Dollar and should this inflation data come in above expectations expect further Euro strength.
The main event this week will be the US jobs report scheduled for release on Friday at 13.30. Expectations are for there to be an additional 180,000 works added to the labour force. ADP is marked for release earlier in the week on Thursday and often gives a clue to the pace of growth of the labour market. The US economy is already showing signs that the robust growth seen earlier in the year is slacking. This, coupled with increased political uncertainty has weighed on the Dollar.
Stock markets in Asia were broadly higher overnight as positive data from China’s construction sector bolstered commodity prices. Equity markets in Europe are also expected to gain with the FTSE to add 8 points and the DAX to gain 30 points. The Yen gained overnight and against the Dollar reached a 6-week low of ¥110.51. The Dollar index was up 0.2% at 93.444, whilst in commodities Oil continued to make gains above the $52 a barrel to $52.82.
EUR/USD is nursing a minor loss ahead of the European open having fell to a fresh daily low of $1.1723 in recent trade. The pair is being pressured by a minor bounce in the US Dollar after the US currency fell sharply on Friday after an uninspiring Q2 GDP print and soft inflation metrics. Comments over the weekend from the ECB’s Lautenschlaeger may also be weighing on the Euro after she said inflation is “not quite there yet” to begin tightening policy. Ahead, Euro Zone CPI will be the main focus for the pair this morning after mixed German retail sales prompted minimal reaction. From a technical view, Friday’s high at $1.1763 may offer some resistance before Thursday’s two-year high at $1.1776. On the downside, Friday’s low at $1.1669 and Thursday’s low at $1.1648 are in focus.
GBP/USD is a touch offside this morning, having fallen to a fresh daily low of $1.3110 in recent trade. The pair is being pressured by a minor bounce in the US Dollar after the US currency fell sharply on Friday after an uninspiring Q2 GDP print and soft inflation metrics. For the pound, Thursday’s BoE meeting will be the main attraction this week with rates widely seen on hold despite three members voted for a hike at the last gathering. UK borrowing and money supply figures are also out this morning. Beyond today’s low, we look for support at Thursday’s low of $1.3051 and Wednesday’s low at $1.2999. On the upside, Thursday’s multi-month high at $1.3157 may offer resistance before the September 16th 2016 high at $1.3248
USD/JPY is little changed ahead of the European open having pared an earlier decline. The pair fell to its lowest level since June 15th during the Asian trading session at ¥110.30, weighed by a strong Japanese Yen after Japanese industrial production rebounded in June. Safe-haven flows also played their part as geopolitical tensions rose over the weekend between North Korea and the US. The Dollar meanwhile has found some support ahead of the European open and pushed the pair back to flat, reversing losses seen on Friday after an uninspiring Q2 GDP print and soft inflation metrics. From a technical view, we look for support at the June 15th low of ¥109.25 followed by the June 14th low at ¥108.81. On the upside, Friday’s high at ¥111.33 and Thursday’s high at ¥111.70 are in focus.
GBP/EUR is little changed this morning after a fairly narrow trading range during the Asian trading session (€1.1193-1.1168). Comments over the weekend from the ECB’s Lautenschlaeger may have pressured the Euro after she said inflation is “not quite there yet” to begin tightening policy. Sterling traders meanwhile will be looking ahead to the BoE meeting on Thursday where rates are widely seen on hold despite three members voted for a hike at the last gathering. This morning, Euro Zone CPI and UK borrowing figures are due. From a technical view, Friday’s low at €1.1147 may offer some support before the July 21st low at €1.1115. On the upside, Friday’s high at €1.1197 and Thursday’s high at €1.1246 are in focus.