The USD is trading a bit lower this morning as the market digests a poor NFP number, following better numbers earlier in the week. The US economy created 2.1 million jobs in 2019, which was lower than the 2.7 created in 2018. After closing down 130 points on Friday, US equity markets look to rebound this morning with DOW Futures pointing towards an opening of 85 points higher later this morning.
EUR/USD made new highs for the last few days overnight, taking advantage of the worse than expected US NFP release on Friday. Continued optimism over the US-China trade agreement is also helping the single currency as traders expect the global economy to benefit from “trade peace”. Traders will begin to focus on German GDP and ECB releases later in the week.
The GBP/USD has fallen to its lowest level in 2020 after the release of the Nov. m-o-m GDP showed that the British economy contracted in November coming in at -0.3% when 0% was expected. Adding to the pressure on the GBP are dovish comments coming from the Bank of England, hinting of a possible rate cut. BOE Governor Mark Carney has said there will be “prompt response” to “economic stagnation”.
Traders seem comfortable adding risk trades ahead of expected US-China trade agreement signing later this week. Easing of tensions for the moment in the Middle East is also helping the USD/JPY. Japan Current Account data is due out later this evening, with numbers expected to be lower this month.
The Canadian Dollar has been trading at a steady pace. Easing tensions in the Middle East have quieted concern over oil, giving commodity currencies such as the Canadian Dollar a firmer footing. The fourth quarter Overall Business Outlook Survey will be released later this morning, and an improvement from last month’s 0.4 would be good for the C$.
The Chinese trade delegation is due to arrive in Washington today for the signing of the Phase One trade deal on Wednesday. The Wall Street Journal is reporting that the US and China have agreed to meet semi-annually to resolve disputes going forward. US Treasury Secretary Mnuchin told Fox News yesterday that the deal has “not been changed in translation”. The English version will be released on Wednesday. The Chinese delegation is being led by China Vice Premier Liu He.