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Daily FX Update – 9th March 2017

The March Fed rate hike train was given a further boost of steam yesterday as the ADP employment report smashed expectation, printing 298,000 against expectation of 190,000; a three year high. As a precursor to the non farm payrolls, the market was quick to pile in to the long Dollar trade and it was generally stronger across the board.

I say generally as it was interesting to note that both the Pound and the Euro whilst slipping slightly, did ultimately remain broadly within the ranges it has been for the last few days. While Sterling didn’t retrospectively suffer too badly, it remains under pressure and the Spring Budget did little to light any sort of fire underneath it. There was little in the way of positivity and whilst this year’s growth forecast was higher, future years were downgraded.

That being said, the Greenback remains firmly in favour, with ultimately solid macroeconomic fundamentals pointing towards a steady, but planned trajectory for monetary policy. A March rate hike now seems all but certain.

Oil took a 5% drop on its worse day since September 2015 as US inventories rose, with commodities generally struggling against the backdrop of a strong Dollar.

Focus today turns to the EU with the central bank interest rate announcement and subsequent Draghi presser. There should be little in the way of surprises. We also have weekly US initial jobless claims.

Have a good day.

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