Forex Forecast

Strong UK Services PMI Ahead of today’s payrolls numbers, FX markets were relatively subdued, although risk appetite was firm in the absence of any major developments in Europe. Sterling rallied after UK services PMI was above consensus at +56.0, rising from the December print of 54.0.

USDJPY Focus Intensifies Radio silence out of Europe has kept investors in wait-and-see mode for yet another overnight session. However, interest in USDJPY is intensifying given the pair is hovering above key levels and US payrolls is just hours away.

Payrolls Ahead Risk managed to end Thursday on a firmer note despite some wobbles out of Europe throughout the day. The closely watched Spanish auction failed to excite markets. Although the Spanish Treasury secured their target allocation and the bid-to-cover ratios looked high, our Fixed Income team noted that the cutoff prices were very low.

EUR Struggles For Upside The closely watched Spanish auction failed to excite markets. Although the Spanish Treasury secured their target allocation and the bid-to-cover ratios looked high, our Fixed Income team noted that the cutoff prices were very low.

Spanish Auction Due Risk assets consolidated yesterday’s gains overnight. The dollar failed to regain lost ground and Asian equities followed the S&P 500 higher. Respectable global manufacturing prints certainly helped, but the gradual easing of sovereign stresses in Spain and Italy probably played the greater role.

Caution Still Necessary Risk was much in favour on Wednesday throughout Europe as broadly positive manufacturing prints globally further consolidated expectations that fears over a global economic slowdown are overdone.

PMI Boosts Abound Risk was back in favour on Wednesday as broadly positive manufacturing prints globally further consolidated expectations that fears over a global economic slowdown are overdone. Chinese and Australian PMI were the bright spots, while most European releases surprised to the upside.

The price action overnight was largely driven by a better-than-expected China PMI which gave AUD a modest but temporary boost. The euro meanwhile remained under downward pressure as investors digested yesterday’s news reports suggesting Greece is resisting further austerity measures to bring debt down to sustainable levels, and that negotiations on this front are likely […]

Euro Surrenders Gains The euro gave back most of its gains on Tuesday largely due to month-end flows and positioning. However, the news flow for the Eurozone is deteriorating again as deadlines loom over the PSI talks.