Thursday, 2 Sep 2010

Markets Calm Ahead of Non-Farm Payrolls Tomorrow

Despite a number of significant news events released today, markets remained relatively calm as investors eagerly await tomorrow's US Non-Farm Payrolls figure. Both the European Minimum Bid Rate and weekly US Unemployment Claims figure came in as predicted, leading to relatively small market shifts.

The one surprise was this morning's UK Nationwide HPI figure, which came in well below analyst predictions. Sterling tumbled as a result, dropping over 60 pips against the euro and almost 80 pips versus the US dollar. Both pairs have since staged a mild recovery. Currently EUR/GBP is trading around the 0.8325 level, while GBP/USD is at the 1.5400 mark.

Tomorrow promises to be a much more volatile day. In addition to the US Non-Farm Payroll figure, the UK Services PMI and the US ISM Non-Manufacturing PMI are all set to generate heavy market movement. Analysts are predicting that the US employment situation improved slightly over last month. If true, riskier currencies like the euro and UK pound could see substantial gains in afternoon trading. On the other hand, if the Non-Farm's figure comes in below expectations, traders can expect that investors will dump their riskier assets in favor of safe haven currencies like the US dollar and yen.