Hot and cold. That was the dollar reaction yesterday after the ADP numbers and it’s going to be a tricky one in identifying which temperature the greenback will settle at after the NFP numbers today. The bond market continues to signal higher rates for longer though, and that’s weighing on equities as well this week.
It does not look like we might get much reprieve for stocks unless the data today disappoints heavily and even then, it just presents more questions about the actual health of the economy.
On the balance of things, everyone may be looking to today’s US jobs report to act as a guide to direct markets where to go next. However, let’s take a step back to be reminded of the fact that inflation data remains the number one driver in these markets. So, next week’s US CPI data is still the mother of all big data to keep an eye out for.
Looking at the charts, the yen continues to intrigue with the potential for a further correction this week. That applies a lot to USD/JPY, EUR/JPY and GBP/JPY in particular. Then, we do have EUR/GBP testing the June lows yesterday around 0.8520 before bouncing a little. And I’m also watching gold in particular as we continue to run close towards another test of the $1,900 mark.
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