USD On The Rise
It’s been a good start to the year for the US Dollar which rallied through the week, driven by the hawkish December FOMC minutes and a bumper ADP employment print. Focus now shifts to the headline event and the first US labour reports of the year. A buoyant Dollar on the back of yesterday’s ADP bonanza tells you that a tight labour market is good for USD, seemingly. With that in mind, the outlook today is for the US Dollar to rally if the NFP beats forecasts.
Expectations for Today
Indeed, given that the forecast today is for 200k down from 263k prior, the bar is set quite low for a USD rally. Away from the headline reading, the unemployment rate is forecast to remain unchanged at 3.7% while wage growth is set to weaken to 0.4% from 0.6%. If seen, a drop in wages should help fuel expectations of a further cooling in US inflation ahead of next week’s CPI print, keeping USD supported on better growth projections. However, any unexpected uptick in the unemployment rate might dampen the rally, if seen.
Where to Trade?
The current meltdown in GBP looks likely to continue near-term with PM Rishi Sunak continuing to lose public support in the latest polls. Political uncertainty, resurgent covid levels, industrial action and the cost-of-living crisis are weighing heavily on GBP here making it a prime target for further losses against USD.
Technical Views
GBPUSD
The move back under the 1.2195 level spells trouble for GBPUSD. Now trading below the rising channel from last year’s lows, GBPUSD looks vulnerable to a run down towards the 1.474 level next if USD rallies today, in line with bearish momentum studies readings.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.