The USD remains steady, oil prices have strengthened, and equities, along with US yields, are mixed ahead of the US jobs report. The USD holds firm before the key US payrolls report, while the JPY tested a nine-week high amid expectations that the BoJ will raise interest rates following a turbulent week for currency markets, characterized by the back-and-forth threats of US tariffs and ongoing geopolitical concerns. Equity markets are mixed, trading within a narrow range ahead of the US NFP report, while Amazon.com fell after a weaker-than-expected outlook. The US Nonfarm Payroll report is expected to show 175k new jobs added last month, with advances of over 200k in the last two months. Elsewhere, oil prices advanced with the pause in US tariffs, while Bitcoin strengthened towards $97.5k, and gold prices firmed. In addition to the US NFP, investors will also focus on the BoE Pill speech, US Average Hourly Earnings, CAD Net Change inEmployment, and the CAD unemployment rate, which will help guide intraday direction in currency markets.
In the news. Trump imposes sanctions on the InternationalCriminal Court. Musk barred from assessing US Treasury payments data. Trump seeks to close tax loophole enjoyed by private equity groups. China blames US 'sabotage' for Panama's departure from Belt and Road initiative. UN nuclear chief says the number of attacks on Zaporizhzhia nuclear plant has increased. UK's tougher immigration policy risks trapping victims in modern slavery. India cuts rates for the first time in nearly five years. Amazon shares drop as cloud growth, sales forecast lag. Trudeau hosting summit today aimed at boosting economy amid Trump tariff threats.
In currency markets. Currency markets are sidelined ahead of the critical US NFP jobs report. JPY fell from its over two month highs, while the INR has its worst week in over 2-years after India's central bank cuts interest rates. CNY is flat, while Asian currencies on average eased by 0.3% against the USD. Trading currencies are mixed, with JPY weakening 0.6%, MXN & NOK down 0.1%, CHF flat, SEK, AUD, ZAR & NZD up 0.1% against the USD.
In commodity markets. Oil prices strengthened by 0.7%. Natural Gas prices tumbled by 0.9%. Gold prices gained by 0.5%. Silver prices firmed by 0.25%. Copper prices rallied by 1.3%, while Wheat and Soybean prices eased by 0.3%.
CAD remains steady against the USD as investors await the US NFP and Canadian unemployment reports, which will shape expectations for both the Fed and BoC. The net change in CAD employment is expected to fall to 25k inJanuary, down from 90.9k in December, while the unemployment rate is projected to rise to 6.8% from 6.7% in December. Our bias remains to buy USD on dips, anticipating greater divergence in interest rate policy between the BoC and Fed, along with ongoing uncertainty regarding US trade tariffs.
EURCAD is sidelined ahead of the Canadian employment report.
EUR remains capped below 1.0400 ahead of the critical US jobs report. Investors remain cautious ahead of the critical January jobs report which is expected show new jobs in January have fallen 175k, significantly down from 256k in December. If we see a stronger NFP report, we could see euro come under renewed selling pressure towards 1.0300. Our bias remains to sell euro on any rallies as the threat of US tariffs and a dovish ECB will continue to weigh on the single currency.
GBPEUR strengthens in early trading as the pound rebounds after Thursday's BoE 25 bps following the less dovish comments from the BoE.
GBP edges higher post BoE rate cut and ahead of the US jobs report. The pound has had a volatile start to February, trading between 1.2250-1.2550 following US tariff threats, increasing Sino/US tensions and the BoE interest rate cut. The pound weakened on Thursday after two policy makers surprised investors after two policy makers voted in favour of 50 bps rates cut. The pound found support in the post-meeting press conference on BoE Governor Baileys comments when he said "we must judge in future meetings whether underlying inflation pressures are easing enough to allow further cuts." Intraday the US jobs report will be the driver for pounds direction.
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