Daily Report

Risky assets continued their move higher overnight as the Iran story died down and euphoria has returned to the markets. USDJPY has managed to hold onto the gains from yesterday however, 109.70/.75 remains immediate resistance for now. Today is US jobs data and should we get a decent print, ( market expects 160K) therefore, anything over this together with strong wage inflation and unemployment print and we could see USDJPY  break this resistance en-route to 110.20. On the flip side should the data turn out poor then we should see USDJPY back down to 109.00 and possibly 108.65. Some FED speakers yesterday said they were happy where rates were at the moment with Evans going so far as saying that there could be no further rate cuts in 2020, today’s number may well change their views going forward.

 

EURUSD has again been very lack lustre however, one thing of note is that the single currency has been posting lower lows which indicates a strong possibility  we will test lower soon, which coincides with our view. Today is NFP and this should be the catalyst for the next move, should the print come out stronger then we should see a break of 1.1080 area and look towards 1.1035/40. Immediate resistance is at 1.1140 with a break above here targeting 1.1200.

GBPSUD traded lower yesterday on the back of Governor Carney’s dovish comments regarding the state of the UK economy. He said “there is a debate at the MPC over the relative merits of near term stimulus” and that “if evidence builds that the weakness in activity could persist, risk management considerations would favour a relatively prompt response”. These comments caught the market by surprise and dragged cable to a low of 1.3012 yesterday, for now there appears to be good buying interest around 1.3000 and subsequently GBP traded back up to 1.3080 later in the session. We were of the belief that GBP would suffer going into Q1 and these comments cement our view more. Earlier this morning BoE’s Tenreyro followed Carney’s dovish stance by saying “may vote for rate cut if uncertainties last” and “more stimulus may be needed if growth doesn’t recover”.   The fact we still have a no-deal Brexit looming and also the chance of a rate cut as soon as May 2020 should continue to weigh on GBP. Immediate resistance is at 1.3080 followed by 1.3140 and then 1.3170. On the downside a break of 1.3000 would open way for 1.2900. GBPEUR is 1.1780.