IFX Market Report: Friday 21st August 2020

After a weak US Jobs report yesterday, in the early afternoon we saw a major USD sell-off, enabling its peers to claw back the losses they made in the greenback’s recent spike, due to the upbeat FMOC minutes.

At 13:30 yesterday, the US weekly Initial Jobless Claims came out at 1.1M, expected at 925k. To add insult to injury, the Philadelphia Fed Manufacturing Index also came out worse than expected, giving a reading of 17.2, forecasted at 21. After a warning from the FMOC meeting minutes about risks of a slowdown in employment, the market is becoming increasingly concerned about the state of the US jobs market, and how that will impact the economic recovery (or lack of). Aside from a weakening on the US jobs front, uncertainty over the next round of US fiscal stimulus continues to weigh on an already fragile dollar.

In reaction to the above, cable covered some significant ground in Thursday’s session. Starting off the day at 1.3087, after the release of the US jobs report, propelled itself to the 1.32 mark. At the close, still trading firm, GBPUSD closed the session at 1.3193.

It was also a positive day for GBPEUR, with the pair moving back above the 1.11 handle. After starting the day at 1.1030, the pair was able to climb beyond 1.11, finally settling at the close at 1.1123.

After reaching weekly lows at the beginning of the session yesterday, EURUSD was able to find solid support at the 1.18 mark, before finishing the day off strong and at the top end of its daily trading range. The pair opened at 1.1865, before closing off just below at 1.1861.

On the data front, it is a packed schedule with several notable releases throughout the day. To start us off at 07:00 we had the UK Retail Sales for July – coming out better than expected, giving the pound a boost before the open. Forecasted at 0%, Retail Sales posted a reading of 1.4%.

Then at 08:30 we had Composite, Manufacturing and Services Flash PMI’s for Germany. Half an hour later, Composite and Manufacturing Flash PMI’s for the Eurozone as a whole. Composite for both Germany and the Eurozone missed expectations, but it does not seem to have impacted to the EUR at all. Following that we have UK PMI’s at 09:30, followed by US Manufacturing Flash PMI and Eurozone Consumer Confidence in the afternoon.

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