Daily FX Trading Update: Hollande’s Hard Brexit Remarks Push GBP Down

The Greenback managed to squeeze out more gains on Thursday as medium-tier jobs data came in strong. Initial jobless claims stood at 249K versus the estimated 255K figure and the earlier 254K reading. Challenger job cuts showed a larger 24.7% fall in unemployment compared to the earlier 21.8% decline. The NFP report due today could show a 171K increase in hiring, larger than the earlier 151K gain and likely enough to keep Fed hike expectations in place. A number of FOMC officials are set to testify before the end of the US session.
The euro caved to the dollar and most of its other peers even though data came in stronger than expected. Germany reported a 1% gain in factory orders versus the estimated 0.3% uptick. German and French industrial production numbers are up for release today, along with the French trade balance.
The pound suffered a sharp drop on what appeared to be a flash crash after French President Hollande reiterated that the EU should give the UK a tough time in Brexit negotiations. He argued that leaving the union comes at a price, one that the UK should be willing to pay. The UK currency quickly recovered as traders booked profits on thin liquidity. UK manufacturing production data is due today and a 0.4% rebound is eyed.
The franc slid to the dollar but managed to hold its ground against its other counterparts. Swiss CPI came in weaker than expected with a meager 0.1% uptick in price levels versus the projected 0.2% increase. For today, the foreign reserves data is up for release and this should shed more light on whether or not the SNB conducted a form of mild intervention to keep EURCHF supported recently.
The yen continued to slide against its peers as traders booked profits off their long yen positions, but the Japanese currency managed to get a piece of the pound selloff. Data from Japan was weaker than expected, with average cash earnings down 0.1% instead of showing the estimated 0.5% gain.
Commodity Currencies (AUD, NZD, CAD)
The comdolls were still weaker against the dollar as risk aversion seems to be taking hold. Canada’s jobs report is due today and an increase of 8.5K in hiring is eyed, which might be enough to keep the unemployment rate steady at 7%. The Ivey PMI is also due and a rise from 52.3 to 53.0 is expected.
To contact the reporter of the story: Samuel Rae at samuel@forexminute.com
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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.