We can forget about Greece for one day at least as we focus on today’s nonfarm payroll in the US. Treasury yields in the US continue to struggle near or just above their January lows and the US dollar’s march higher has reached a peak. This dollar weakness has allowed GBPUSD to recover back above 1.5300 defying the near term resistance we earmarked around 1.5220, marking in a new one month high and now focus is on whether it can push on to the next major resistance seen around 1.5480.
This is only likely to happen if we see a disappointing nonfarm payroll figure today, where expectations are for a number of 234K, a dip from January’s 252K. But it’s not all just about the big figure as average earnings should be monitored which are expected to rebound from -0.2% to 0.3% and the unemployment rate is due to stay at 5.6%.
The bottom line is that even though the long term trend for the dollar looks to be upwards, as with any trend they never go in a straight line. The reason for the recent correction is that investors are readjusting for a US economy that will not be growing as strongly in a couple of years’ time as was the consensus only a few weeks ago. Expectations for the first rate hike from the Federal Reserve are slowly being pushed further out, edging towards November / December when they were more September / October before.
It is worth noting that Canadian unemployment figures are released at the same time today which could see some volatility in USDCAD, a rate that’s seen an explosive move to the upside but come back from its recent high around 1.2800 and is trading at 1.2445 at the time of writing.