Summary:
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FTSE on track for 5th consecutive daily gain
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GBP mixed on the week
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Traders await NFP
The FTSE is trading higher this morning once more with the benchmark set for a clean sweep of daily gains this week as equities around the globe have bounced back from last month’s declines. The pound has had a fairly quiet week with the currency showing a diminished volatility to Brexit headlines while the latest batch of economic data suggests that the UK economy is just about keeping its head above water despite the elevated levels of uncertainty.
A bullish outside week is forming for the FTSE with the market bouncing from prior support around the 7075 level. Source: xStation
US jobs report in the spotlight
The monthly US non-farm payrolls release is always one of the highlights on the economic calendar but this afternoon’s data will be viewed even more keenly than usual with speculation mounting that the Federal Reserve are set to begin cutting interest rates in the not too distant future. The ADP employment change on Wednesday fell to its lowest level since March 2010, and given its correlation with today’s more widely followed NFP there is a concern that we could be set for another big miss. A print below 100k this afternoon would likely set the alarm bells ringing and raise expectations even further for a Fed rate cut.
Chinese Yuan drifting lower
There’s been a marked depreciation in the yuan in recent trade after the Chinese central bank governor hinted at stimulus measures to prop up the world’s second largest economy. Yi Gang suggested that there’s no line in the sand for the currency and that he would be willing to ease policy to protect the economy from the fallout of the trade-war with the US in a development that caused the offshore yuan to experience its largest fall in over 3 weeks. The currency has fallen to its weakest level since November against the US dollar and is getting perilously close to breaking above the 7.00 handle. The round figure has provided a ceiling to the USD/CNH on a couple of recent occasions (last October and December 2016) and given the well publicised accusations by the Trump administration of Beijing manipulating their currency lower, a break above this mark could well send shockwaves through the financial markets.
