Friday January 6, 2017 - 12:41:06 GMT
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Forex Update: US Jobs Data Matters But Will It Affect the FOMC?
Markets are on hold ahead of the December U.S. employment data at 13:30 GMT. It seems that no matter how the data turn out that there is a strong market reaction, justified or not. Street estimates are for a gain of 175K in the month. The bottom line is always whether the data will impact the future course of Fed policy, but in this case with the Fed having already raised rates in December and the markets already having priced in a mid-year hike with 100% odds, it is unlikely to alter policy expectations significantly. Furthermore, the Fed likely is on hold because it will be waiting to see the shape of the fiscal policy stimulus of the new administration, which will be installed two weeks from today. I feel today's data is unlikely to significantly impact the USD outlook.
Activity by the PBOC continues to impact the USD, but should abate fairly soon. The EURUSD HOD has been 1.0614. Its LOD is 1.0574. There is not a lot of significance between these lines. Use 1.0600 to set the tone. Above the HOD is 1.0662 which COULD be probed on a NFP spike, while there is not a lot of significance below the LOD. I would defer to Jay's "50" level (1.0550) as a likely support area.
The EURGBP is trading higher, as the GBPUSD is trading softer. The EURGBP cross can often tip the scale in EURUSD activity. Kep an eye on the S&P today. It has been trading inversely with EURUSD. Tune in frequently into the GVI Forum for trading insights as the session unfolds.
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