The financial markets saw a return in risk-taking during the New York trading session, thanks to an upbeat ADP non-farm employment report and Fed Beige Book. Commodity currencies even managed to shrug off the large buildup of 10.4 million barrels in US crude oil inventories, with traders focusing on the lagging production numbers.
USDJPY rallied to a high of 114.43 before retreating to a low of 113.35, EURUSD climbed to the top of its short-term range around 1.0875, GBPUSD rallied up to the 1.4075 area, AUDUSD broke one resistance level after another and is currently testing .7300, and USDCAD is hovering above the 1.3400 support area.
The ADP non-farm employment report showed a gain of 214K versus the projected 185K increase for February, hinting at a possible upside surprise in Friday’s NFP release. Analysts are expecting to see a 195K increase in hiring, faster than the previous 151K gain, with a stronger than expected reading likely to revive speculations of a Fed rate hike for March.
AUD extends gains on strong trade figures
The Aussie was unstoppable in its climb, as it followed through from its upbeat GDP reading released yesterday with an upbeat trade balance printed in today’s Asian trading session. The trade deficit narrowed from 3.52 billion AUD to 2.94 billion AUD, smaller than the projected 3.22 billion AUD shortfall. Components of the report showed a seasonally adjusted 1% gain in exports.
AUDJPY advanced to a high of 83.49, EURAUD carried on with its drop below 1.5000 to a low of 1.4848, GBPAUD is down to 1.9250, and AUDCAD is up to the .9800 handle.
However, the Chinese Caixin services PMI showed a sharp drop from 52.4 to 51.4 versus the projected increase to 52.6. Aussie bulls seemed to shrug off this downbeat figure, though, as the official PMI readings released earlier in the week gave a preview.
GBP pairs to retreat on services PMI release?
So far, pound pairs have been climbing despite downbeat PMI readings from the manufacturing and construction industries, possibly as a short squeeze is taking place. For today, the services PMI is due and a drop from 55.6 to 55.1 is eyed, indicating a slower pace of growth. A weaker than expected reading could show that the industry is contributing less to overall economic performance, which might be bearish for the currency.
GBPJPY is still on a tear up to the 160.75 area, EURGBP broke below its short-term trend line to test the .7700 support level, GBPCAD pulled up to the 1.8900 area, and GBPNZD is consolidating around 2.1085.
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