On the back of positive US economic data earlier this week the markets in the US have gained anticipating a positive Non Farm Payrolls result today. The expectation is that NFP’s will add 175,000 versus 39,000 in November. If expectations are not met we could however see the market reel with dissapointment. Non Farms is historically one of the most volatile and influential data releases in the FX calender. The release will undoubtedly set the tone for the day.

The Euro is still coming under pressure in opening trade today, being weighed down primarily by a sell off in government bonds ahead of influential news events next week. Yesterday the EU announced plans for how in the future, senior bond holders might share in future banking losses. The Euro’s fate lies with a host of economic releases this morning. Quarter 3 GDP is eagerly awaited at 1000 followed by the unemployment rate for November.

CIPS services PMI data yesterday showed that after reaching a four month high of 53.2 in October there was a significant pullback in December to 49.7. This can be attributed to severe weather conditions and weak new orders. The construcion PMI result suffered the same fate dropping below the key 50 level in December. The expectations are that things will recover moving forward supported by the strong rebound seen in the manufacturing sector.

It is unlikely that we will see any major moves in the USD until the NFP is announced. Traders will focus on news trading the Eurozone releases in this mornings session before trading the more influential NFP releases at 1330.

Support on cable is at 1.5350, this level will act as key support with several tests and failures already this year. We would expect resistance at 1.5550 and again at 1.5640 however a move towards support in this mornings trade is looking more likely.

Support on the the GBP/EUR pair is at 1.1860, resistance is at the psychological level of 1.20. A continuation of trend through 1.19 and a move towards 1.20 could be seen today yet is largely dependant on the eurozone economic releases this morning.

If you have a requirement for currency and have any questions or queries with reference to the markets, please don’t hesitate to contact me on the dealing desk.

Luke Zorab

Torfx Currency Dealer

“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”