US jobs report provides shock surprise to the upside as dollar gains 1.4%, BoE’s Pill confident inflation to fall this year.
Looking for some in-depth market insights? Check out our latest edition of SVB FX Navigator
-
FX Rates
February 6, 2023Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.
Source: BloombergGBP/USD 1.2064 GBP/EUR 1.1181 EUR/USD 1.0790 USD/CAD 1.3405 EUR/CHF 0.9972 EUR/SEK 11.4229 EUR/NOK 11.0547 EUR/DKK 7.4450 USD/ILS 3.4396 AUD/USD 0.6928 NZD/USD 0.6323 USD/SGD 1.3233 USD/JPY 131.86 USD/CNH 6.7833 USD/INR 82.6325 EUR/ILS 3.7113 GBP/ILS 4.1496 USD/ZAR 17.4982
-
GBP
GBPUSD fell nearly 0.8% on Friday following stronger than expected US data. The pair has regained some traction during the early session, however, remains subdued around the 1.2060 level at time of writing. The FTSE has opened on a sharp decline, losing 0.5% this morning as increasing US/China tensions dampens sentiment.
BoE Chief Economist Huw Pill stated on Friday that he is confident inflation will fall this year following their consistent rate hike program in the UK. Chatter surrounding MPC members continues to be dovish, highlighting an increasing divergence between the BoE and ECB. MPC member Mann is due to speak today, which will be a key focus for markets.
The UK services sector comes under further pressure today, as the biggest round of NHS strikes begin. One third of nurses and ambulance staff are expected to strike today.
EURThe euro tumbled against the Dollar on Friday, losing over 1% as US non-farm payroll figures shocked markets with an impressive print. After reaching 10-month highs last week, EURUSD seems to have entered into a consolidation phase, trading below 1.0700 at time of writing. German factory orders climbed 3.2%, beating 2% forecasts, although unable to buoy the single currency.
Several ECB policymakers, echoed recent hawkish sentiment on Friday, citing that March’s rate hike, which has already been confirmed by Christine Lagarde, is unlikely to be the last and a 25-50bps hike could be possible in May. Retail Sales for the Euro area and a speech from ECB President Lagarde will be the key focus for markets today.
USDThe January jobs report provided a shock surprise to the upside. Job growth was extremely robust surpassing the 180,000 estimates at 517,000. Consequently, the unemployment rate pushed slightly lower to 3.4% from 3.5% prior. It is unlikely that this reading will alter the Fed’s policy plans considerably, as they will wait for more reliable signals from the employment cost index. Estimates see the underlying pace of wage growth remaining above 4%, substantially higher than the Fed’s price target.
The dollar jumped higher following last week’s jobs report, with the DXY now trading 1.4% higher, as markets accounted for wage growth remaining higher for longer.
The US military has shot down a giant Chinese balloon which they allege has been spying on key military sites across the US. Beijing has insisted that the balloon is a weather ship, which has been blown astray.
ASIA/PACIFICIndonesian growth didn’t drop below trend; however, it has slowed enough to potentially dissuade the central bank from raising interest rates further this month. Whether this ends its tightening cycle will depend on the rupiah’s stability.
The border between Hong Kong and mainland China fully reopened today as daily quotas and testing requirements were dropped. Meanwhile, the mass trial of Hong Kong pro-democracy figures began today with 50 defendants set to go on trial.
ILSJacob Frenkel, a former Bank of Israel chief warned of the negative impact of the coalition’s judicial overhaul. He compared the situation to Poland, where the nations credit rating dropped, prices rose, and its capacity to borrow was weakened. Off the back of the US jobs report, USDILS trades near 3.44.
Data & EventsEuro-Area Retail Sales
UK NHS strikes
Risk Statement
Trading in financial instruments may involve a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both loss and profit. Investors should carefully consider whether financial instruments suit their needs, financial resources and personal circumstances.
The information contained in this material is solely for informational purposes only and it is not and should not be construed as an offer or a solicitation of an offer to buy or sell any financial instruments and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated prices. This material does not contrue advice.
For more analysis on FX markets or information regarding SVB's FX services:
0800 023 1440 from within the UK
+44 207 367 7880 from overseas
See all of SVB's latest FX information and commentary.
Source: Bloomberg | |
© 2023 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. SVB Financial Group and its subsidiary Silicon Valley Bank are members of the Federal Reserve System and Silicon Valley Bank is a member of the FDIC. Your eligible deposits with Silicon Valley Bank UK are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit http://www.fscs.org.uk. For more detailed information about coverage and limits, please review our FSCS Information Sheet at http://www.fscs.org.uk. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction. Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. Opinions expressed are our opinions as of the date of this content only. The material is based upon information which we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. |