USD Strength Ahead Of U.S. Payrolls
There was little on the data front to cause much volatility in the FX markets today, though we did see some more USD strength ahead of the key US payrolls release Friday. The key reversal in the greenback yesterday has seen some hefty positioning since Tuesday, and we continue to see players jumping in on the trade despite the near term risks ahead. EUR/USD was looking to have stabilised in the mid 1.1400s, but the pair has been driven lower hitting support levels through 1.1400. Cable has been driven lower to set new lows on the day just under 1.4450, but some decent buying interest seen at these levels, as there are in EUR/USD into the mid 1.1300s. AUD and CAD looked to be getting some near term reprieve, but we are seeing levels stretched again, with North American players pushing for the recent extremes seen. NZD/USD is pretty much unaffected, largely through the lack of participation, so intra-day specs pushing themes in the more liquid pairs. UK data saw the key services PMI weaker than expected, but perhaps not as bad as the manufacturing number would have suggested, hence the muted GBP response – EUR/GBP pushing lower and cable bids holding firm in the 1.4450-00 range. Australian trade gap narrowed to give the AUD some near term relief, but players are keen not to miss the USD recovery – which may be derailed in the short term if US jobs come in on the softer side. Weekly claims rose 17k.