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July 2017

Euro benefits from ECB and data

Published: Friday 07 July 2017

  • Euro benefits from ECB and data
  • Sterling awaits slew of UK data
  • USD poised for strength ahead of employment report
By David Johnson

Am I alone in hearing the Frankie Goes to Hollywood track, ‘Two Tribes’ when I think of Trump meeting Putin? Maybe the video showing Reagan and Chernenko wrestling is in my psyche. OK… it is just me then. Anyway, they meet today but I am guessing the US election won’t be involved in the public conversation.
 
Quite bullish talk from the European Central Bank has pushed the Euro higher in most exchange rates and limp US data allowed the EURUSD rate to climb above $1.14. This morning’s German and French industrial production numbers were better than forecast and that has allowed the Euro to hold onto those gains. That’s pretty much all we are going to hear from the Eurozone this morning except perhaps further Brexit rhetoric, so the Euro has room to give up some of those gains. Euro buyers beware.
 
The big news for today will be the US jobs report. A payroll gain of 180,000 or more is expected and anything substantially higher than that will boost the USD. The note of caution comes from last month’s figure of just 138,000 in fresh jobs. This data is notorious for revisions, so don’t be surprised if that number is changed along with the figure for June. However, if that employment number disappoints but the wage growth percentage is above 2.6%, the pressure on the Federal Reserve to hike the US base rate will increase. That would strengthen the USD. Anything else may allow the Dollar to weaken.
 
The US employment report tends to overshadow the equivalent Canadian data but there is scope for Canada’s unemployment rate to have dipped back to 6.5% from last month’s unexpected rise to 6.6%. That would benefit the Canadian Dollar, as you might expect.
 
Before that we get a slew of UK data and the forecasts are rather good. We are expecting industrial, manufacturing and construction output to have risen and for the trade deficit to have narrowed somewhat. If all the positive forecasts are true, the Pound could leap into the weekend with a spring in its step.
 
And then we are into the interesting part of Wimbledon and the much much much more interesting NZ All Blacks v British and Irish Lions decider. It is going to be a doozy. Can’t wait. Have a great weekend whatever you are up to.

​For more information, infographics and the latest currency insights, visit www.halofinancial.com/news

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