The US dollar had a strong day yesterday as two major risk events combined to help it drive higher against all the other major currencies with the exception of the Cad. The main reason for the strong rally was President Trumps signing of the tariff proclamation on imported Steel and Aluminium with a crucial caveat that close neighbours Canada and Mexico were excluded. He also opening the door for other allies to apply for exemption. This move was well received by global markets and stocks rallied well with commodity prices taking a significant hit. The other main risk event was the EBC rate decision and more importantly the following press conference, the ECB did drop it’s easing bias wording but further comments from Mario Draghi were interpreted as more dovish and the inflation forecast was cut by 0.1%, this saw the EurUsd drop nearly a 150 pips from just shy of 1.2450 to 1.2300.
There was also further pressure on the sterling with another report that UK officials fear that a Brexit deal will not be concluded this year and that next January is a more realistic deadline.
Looking ahead to today’s session and we finish the week with the important US Non-Farm Payroll data, but before we get to that there’s more potential market moving events. In the Asian session we have Chinese PPI and CPI data due before we have the conclusion of the latest BOJ meeting. Once again no change is expected but the market will be looking closely at the statement and Press conference for any talk by Kuroda on any adjustment to the banks ultra-easing policy.
Into the London session and we have the UK’s Manufacturing Production data due but focus will swiftly move to the New York open and the key Non-Farm Payroll data. Market expectation is for a 205k print but traders will also be looking at the Average earnings number very closely as it’s of particular interest to the Fed in the current environment. Canadian employment data is due at the same time which can make for tricky trading conditions in the Loonie.