USD

It is a big week for US jobs data this week. Having remained remarkably resilient in the face of the string of US rate hikes over the past year, there are a few early signs of potential cooling in the labor market. The latest JOTLS job openings declined to 9.931M, slipping below the 10.4M expected and representing the lowest level since May 2021. That decline also came right in the middle of the pandemic shutdown. Today’s ADP (private payrolls) have therefore gained significance. Any weakness in the ADP, backed by similar declines amongst the key payrolls on Friday, could help to convince markets of a greater chance of an impending pause from the Fed. In the meantime, the dollar remains in a downtrend, with the dollar index (DXY) slipping by around 1% so far this week. 

EUR

It has been a mixed bag among European data releases today. On the plus side, the latest German Factory Orders impressed, rising by a whopping 4.8% over the past month. The strong release highlights a worthy bounce back amongst manufacturing. However, the region-wide PMI data saw notable misses amongst German and French Services PMIs. Having rallied by around 1% this week, EUR/USD is consolidating as markets await key US ADP data later today. 

GBP

The pound continues to probe higher, partly due to a stronger UK economic outlook. Having risen to a 10-month high earlier in the week, GBPUSD is drifting lower as we await crucial UK PMI data, followed by the ADP release (see USD). The pair is still over 1% higher so far this week, which clearly illustrates the ongoing strength of the pound. 

JPY

With US bond yields rallying through the week, the Yen has received a welcome safe-haven boost, with USD/JPY slipping by over 1% and EUR/JPY dropping by around 0.3%. Given the clear difference between Yen gains amongst the two pairs, dollar weakness appears to be the dominating driver. That can also be clearly reflected by moves elsewhere among the key dollar crosses.

CAD

The recent Loonie charge looks to be consolidating, having rallied sharply over the past week. This may be partly due to the decline yesterday in the price of oil, having surged over 6% previously. Tomorrow’s crucial Canadian employment data will also play a big part in determining the longevity of this strong Loonie rally. 

MXN

The recent surge in the Peso (USD/MXN decline) appears to have run out of steam after rising by around 4.5% in just two weeks. Despite the consolidation, further gains for the peso cannot be ruled out if Banxico* maintains its hawkish approach to Mexican rates, which is expected by markets.   

BRL

Increasing market fears over a potential recession in Brazil have helped drive the Real lower, as USD/BRL rallies by over 0.5% this week. However, the declines have been relatively consistent with drops elsewhere for emerging market currencies against the dollar. This is also to be expected, given the big jump in the value of the Real over the past couple of weeks.