USD spends the day in the green to pare some of yesterday’s losses, while low oil prices continue to weigh on commodity currencies
Today saw USD the notable outperformer, with other key currencies seeing some fairly choppy price action. USD spent the session in the green to pare back some of yesterday’s losses, with the greenback strength coming despite lower than expected ADP data (190K vs. Exp. 200K), while the jobs numbers came out lower than expected, it was not considered low enough by participants to alter the Fed’s rate path, with participants looking ahead to Friday’s Nonfarm payroll report.
In line with USD strength, JPY saw a bout of weakness during today’s session in an unwind of recent safe haven flows ahead of the Chinese holiday in celebration of their WWII victory over Japan. As such we saw USD/JPY break back above the 120.00 handle to the upside, outperforming other key pairs.
Elsewhere, commodity currencies have continued to be in focus today, with continued weakness amid concerns of a slowdown in China, as well as weak API inventories yesterday and today’s DoE inventories (4667K vs. Exp. 900K). This saw downside in the likes of CAD and RUB, while AUD/USD fell below 0.7000 for the first time since 2009 as Australian GDP printed a 4 year low (0.20% vs. Exp. 0.40%).
Looking ahead, tomorrow sees a host of Services PMIs out of Europe, the UK and the US, as well as US trade balance and weekly jobs numbers. The standout event for many European traders will be the ECB rate decision and while all surveyed analysts expect rates to be kept on hold, focus will fall on ECB’s Draghi for any comments on inflation or indication of an expansion of the current QE programme.