Today, the single currency is taking advantage of its recent safe-haven appeal as investors continue to move out of the riskier emerging market currencies. The Euro’s strength has been seen again this morning as concerns over the economic health of China. The PBoC were still not able to stop last week’s sell-off which wiped off around $1 trillion of value on Chinese stocks. The worry is that China’s growth is to set to slow to its slowest economic pace since 1990 and investors are jumping ship as a result.
The first Friday of the month and the US posted a stellar Non-farm Payroll figure which registered at 292k, against an expectation of 203k. Despite this bullish figure the Greenback did not make dramatic gains against its major counterparties, this data points to a potential rate hike in March providing further economic data posts in or around expectations.
Watch our currency round up with Global Reach Partners’ Head of Trading Jamie Jemmeson, as he reviews last week’s market news: https://www.globalreachgroup.com/fx/currency-weekly-round-08-01-2016/
The week starts quietly with no high tier data being released. However, the focus of the markets will continue to be on the flight to safety from China and emerging markets into the Euro.
The UK releases the monthly Manufacturing Production figure and Industrial Production, where Manufacturing is expected to return above 0% from the previous -0.4% and Industrial is forecast to decline slightly to 0%.
Once again a fairly quiet day, with the unexpected decline of Oil prices at the start of the year to a fresh 11 year low. Much of the focus will be on the Inventories for clues in price action moving forward. With inflation continuing to bump along the base, this could be an important factor for potential monetary policy.
The BoE takes centre stage today despite the early indications of a rate rise being pushed back till 2017. Last week’s data was soft resulting in the pull back of GBP/EUR and GBP/USD. As an importing nation this could actually help and offset the decline oil which could boast inflation. However, the format of the BoE meeting has changed shape recently resulting in the minutes, voting break down and decision all released at the same time. The market will be keen to see if the committee mirrors the dovish view on interest rates as the market. Later in the afternoon investors will be keen to see if the US weekly jobless claims echoes the same sentiment as the bullish Non-Farm Payrolls.
Following on from last week’s positive Non-Farm Payrolls, the Dollar bulls will be keen to see if there will be a continuation from the last week’s employment data. The Retail Sales number will be a key sign of sentiment and confidence towards the latest rate and those pending this year. Also on the docket to note is the Empire Manufacturing.