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US dollar tumbles as nonfarm payrolls surprise fuels Fed rate cut speculation

currency-newsUS dollar tumbles as nonfarm payrolls surprise fuels Fed rate cut speculation
The pound rocketed higher against the US dollar at the end of last week’s session as USD investors were left disappointed by the release of the latest US payroll figures.

Trade in Sterling appears mixed at the start of this week’s session however, with GBP/EUR steady at €1.1242 at the same time that GBP/USD slides to $1.2707 and GBP/CAD dips to C$1.6852, while GBP/AUD and GBP/NZD accelerate, rising to AU$1.8235 and NZ$1.9180 respectively.

In focus today will be the release of the latest UK GDP figures, which may see GBP exchange rates tumble if growth contracted again as expected in April.

What’s been happening?

A sharp drop in the US dollar shaped currency markets at the end of last week’s session, with the GBP/USD exchange rate touching a two-week high on the back of some disappointing US payrolls figures.

With US payrolls notably undershooting expectations, further fuel was added to speculation that the Federal Reserve will need to cut interest rates in the coming months, extending the US dollar recent losses.

Meanwhile the euro came under fire at the start of Friday’s session on the back of some abysmal German industrial production figures, which sparked concerns over growth in the Eurozone’s largest economy.

However GBP/EUR exchange rates ultimately closed the session on the back foot with demand for the pound insipid as Theresa May stepped down as leader of the Conservative Party.

What’s coming up?

Centre stage today will be the release of the UK’s latest GDP figures, which might propel the pound lower as economists forecast that domestic growth will have contracted for a second consecutive month in April.

Further pressuring Sterling sentiment will be the accompanying industrial production figures, which are expected to show factory output at the start of the second quarter tumbled from 0.7% to -0.7%.

Meanwhile, USD investors are likely to pay close attention to this afternoon’s JOLTs jobs numbers, which could stoke further concerns over the state of the US jobs markets and dent the appeal of the US dollar if they slowed as suspected in April.

Finally, in the absence of any notable Eurozone data at the start of the week, movement in the euro may be driven by any developments in Italy’s ongoing debt feud with the EU.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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