The US dollar (USD) strengthened across the board yesterday ahead of today’s big announcement – The Nonfarm Payrolls data.
Today’s NFP announcement is very important because the US Federal Reserve made it clear that hiking interest rates depends on how fast the labor market improves. If wages rise and the unemployment rate holds steady or improves, a rate hike before the end of the year will be extremely likely and this may send the USD soaring. Following yesterday’s upbeat Unemployment data, there is a great chance for a solid NFP report today. US Unemployment Claims for the previous week came in at 249K, better than the expected 255K, and the previous 254K.
After a brief recovery, the British sterling pound (GBP) continued its slide yesterday and in early Asian trading today. Against the USD, the pound has lost more than 5% in only 2 days. Also, the euro (EUR) drifted sharply lower after holding steady at the start of the week following rumors that the European Central Bank (ECB) is planning a tapering action. However, after yesterday’s confirmation from the bank’s member Constacio that the rumors are not correct, the EUR fell, with the market more or less assured that only easing measures would be pursued.
Aside from the NFP data and the US dollar, the Canadian dollar (CAD) will also be the main focus for investors today. Canada will be releasing employment and manufacturing data. The oil-driven economy witnessed impressive jobs growth in the month of August and investors expect a slight correction for September. However, a weaker currency is expected to boost its manufacturing sector. Meanwhile, in Europe, the market will also watch out for month on month Manufacturing Production in the UK.