This week has been building up to today’s non-farm payrolls figure out of the US at 13.30. Expectation is for another positive number with a figure of around 150,000 being quoted. Most of the employment data out of the US has been solid over the past few months and there is no reason to think that this will have changed over the last month. We should see the Dollar strengthen off the back of a good figure so expect volatility around the time the data is released. The FED, starting with their statement last week, has been trying to dampen the recent positivity over the US economy and weaken their currency. This was continued yesterday as Ben Bernanke spoke in front of the House Budget Committee, again sounding cautious and warning that the US recovery could be vulnerable to any problems in the Eurozone. This comes in contrast to other financial figures like Jamie Dimon who last week at Davos said a Greek default would have no effect on the US banks or economy. It is hard to know who to side with an investment banker or a central banker?!
We still have no news of any agreement in the Greek talks and this looks set to drag on into next week, meanwhile the focus may soon shift from Greece to Portugal as the interest rate on their bond auctions is rising at an alarming rate. German and Eurozone PMI numbers were slightly worse then expected this morning with figures of 53.7 and 50.4 respectively. This was in contrast to a good number out of the UK at 09.30 of 56 which was the highest figure since March 2011. We have retail sales figures out of the Eurozone at 10.00 and theses are expected to be worse so we may see the Euro weaken slightly once they are released. Apart for Non-farm payrolls we also have the US unemployment rate figure out which is expected to remain at 8.5% and factory orders out at 15.00 which are expected to be slightly worse then last month.
The market could be fairly volatile today with Cable perhaps running up to a level of 1.59 before coming off around the US figures at 13.30. EUR/USD could also see 1.32 before the non-farm payrolls figure. It may be a good idea if you are a Dollar buyer to secure rates early today to avoid the volatility later on in the day. We expect GBP/EUR to be fairly stable trading between 1.20 and 1.21.
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