Daily Brief

Daily Brief

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USD remains well bid

USD

The USD is trading mostly higher this morning as against the Euro, Japanese Yen, and Canadian Dollar, while GBP is higher. Traders seem to have moved their attention away from the Coronavirus and back to economic data for the time being. US ADP employment and ISM services will be the highlight of today’s news as traders look towards the release of Non-Farm payroll on Friday. After finishing higher on Monday, the Dow continued its rally finishing over 400 points higher on Tuesday. This rally has continued through Asia and Europe and this morning Dow Futures are once again higher pointing towards an opening of over 300 points later today. US ADP Employment Change is expected to fall from 202,000 in December to 160,000 in January. Some analysts feel this is an indicator of the NFP announcement on Friday, so there will be scrutiny of this number. Later this morning ISM Non-Manufacturing Services number will be released and it is expected to be slightly higher at 55.1 and last month’s 55.0. 

EUR

EUR/USD continues to trade to the downside despite better than expected Composite and Services PMI numbers. Composite PMI came in at 51.3 better than the expected 50.9 and Services PMI was 52.5 better than the expected 52.2. Traders will pay close attention to a speech given by European Central bank President Lagarde in which she may comment on the current economic condition of the Eurozone and how the bank will react going forward.

GBP

GBP/USD moved higher earlier this morning as UK Composite and Services PMI for January both were reported and came in higher than expected. Composite PMI moved from 52.4 to 53.3 and Services PMI came in at 53.9 after 52.9 last month. Brexit negotiations will continue to weigh on the pound as both sides seem to be “digging in”, and the longer negotiations drag on the more concern there will be over the UK leaving the EU at the end of the year without a trade deal.

JPY

USD/JPY is higher this morning as traders are leaving safe-haven trades and moving back into taking on risk. USD/JPY currently trading at overnight highs and on a technical basis could trade higher, especially if US data this morning is positive. Bank of Japan Deputy Governor Wakatabe spoke overnight and warned of “heightening uncertainties” due to the spread of the virus. He also said the “downside risks remain” and the BOJ won’t hesitate to take additional easing steps if necessary. 

CAD

The Canadian Dollar was trading slightly higher this morning as both Brent Crude and West Texas Crude prices moved up more than 3% in early morning trade. Reports from Chinese media of possible drugs that could effectively “inhibit Coronavirus”, were given as reasons for the move. The Canadian Dollar will continue to be influenced by oil prices as will the other “commodity currencies”.

CNY

While markets are improving, China’s Coronavirus cases continue to rise, as the number of confirmed cases has risen to 24,324, while the death toll now stands at 490. The virus is affecting the US-China trade deal, as US economic advisor Larry Kudlow told Fox Business that there will be a delay in the Chinese purchase of US goods.

USD: Stocks rebound and economic data is on the agenda today.

USD: Stocks rebound and economic data is on the agenda today.

EUR: EUR remains under pressure, despite better than expected data release.

EUR: EUR remains under pressure, despite better than expected data release.

GBP: GBP higher following strong PMI release, but Brexit fears remain.

GBP: GBP higher following strong PMI release, but Brexit fears remain.

JPY: JPY moves lower as traders exit safe haven trades.

JPY: JPY moves lower as traders exit safe haven trades.

CAD: Loonie trading off overnight lows as oil prices rise.

CAD: Loonie trading off overnight lows as oil prices rise.

CNY: China trade deal could be affected by virus concerns.

CNY: China trade deal could be affected by virus concerns.

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