The week has started off fairly quietly in terms of price action as analysts and economists make sense of the monthly US jobs numbers while also focusing on this week’s main events. European bourses have opened up mixed amid very low ranges while Asian markets traded in the green and red, with Japan’s Q1 GDP being upwardly revised to -3.9% q/q from -5.1% q/q initially reported.
The dollar has a small bid this morning trading just above 90 in the DXY but within this week’s range so far with no clear move lower after the nonfarm payrolls second monthly miss in a row. It seems the jobs report was not strong enough to price in a change to Fed rhetoric which many of the dollar bulls were expecting, and not weak enough for markets to turn lower.
Some market watchers are asking if we have hit the goldilocks scenario with the economy neither too hot nor too cold, but just about right. For the greenback, the fall in yields brings little support, though yesterday’s follow through selling has not been totally convincing.
The UK is due to fully reopen on June 21 but there are now doubts about whether this will happen as speculation is growing that this date may be put back two weeks. Although major parts of the economy are up and running already, the psychological impact of a delayed move plus the possible uncertain date of the “new reopening” is giving GBP bulls cause for thought. The UK government is set to announce its decision next Monday, 14 June, so GBP may be choppy into this date.
Cable is stuck in its 1.41-1.42 range with the 1.42 test last week being strongly sold into. The more we trade sideways and compress within narrow bands, the stronger the resultant breakout will be when it comes. Resistance sits at the high from last Monday at around 1.4250 while a strong close below last week’s low at 1.4082 needed to encourage the sellers to come out in force.
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