Dollar Gains as Pound Slips on Labour Data – Markets Wrap

10 September 2024 – London Time

As European markets open, the US Dollar continues to rise, with the Dollar Index (DXY) stabilising around 101.60 and aiming for 101.80.

Meanwhile, the British pound is under pressure following weaker-than-expected labour market data, setting a bearish tone for the session. In Asia, traders supported gold, keeping it above $2,500/oz, reflecting ongoing concerns over inflation and global risks.

Asia Session Recap:

• Dollar: Continued to strengthen, targeting 101.80.

• Gold: Held steady above $2,500/oz despite dollar strength, signalling demand for safe-haven assets.

European & US Sessions Outlook:

GBP:

• Claimant Count Change: Dropped to 23.7K from 102.3K, below the forecast of 95.5K, indicating a stronger labour market but pushing the pound lower.

• Average Earnings: Slightly missed expectations at 4.0%, increasing downside pressure on the currency.

EUR:

• Attention shifts to German CPI data, expected to show easing inflation. A weaker print could soften the euro ahead of Thursday’s European Central Bank (ECB) meeting, where inflation and growth forecasts will be key.

USD/CAD:

• Traders await a speech from Bank of Canada Governor Tiff Macklem. Following last week’s dovish rate cut, USD/CAD climbed past 1.3550. Further dovish signals could extend the pair’s gains.

Key Events Today (London Time):

• UK Data: 9:00 AM – Claimant Count Change, Average Earnings

• BoC Governor Macklem: 3:10 PM

• Federal Reserve Speeches: 2:00 PM and 4:15 PM (Barr and Bowman on Basel III and Stress Testing)

Market Sentiment:

• DXY: Medium Bullish, supported by ongoing Fed hawkishness.

• Gold: Weak Bearish, with dollar strength limiting upside.

• GBP: Medium Bearish, with labour data weighing on the currency.

• EUR: Medium Bearish, facing inflation risks ahead of the ECB.

• CAD: Weak Bullish, depending on BoC policy direction.

Central Bank Insights:

• Federal Reserve: Interest rates remain between 5.25% and 5.50%, with no cuts expected until inflation consistently returns to 2%.

• ECB: Thursday’s meeting will be crucial as markets seek clarity on inflation trends.

• Bank of Canada: The dovish stance is likely to persist, with more insights expected from Governor Macklem’s speech today.

Futures Market Snapshot:

European futures are steady as investors await this week’s US inflation data. A cooler CPI print could impact Fed rate decisions and set the market's direction.

Today’s market is set for key moves as labour data puts pressure on the pound and the euro faces inflation concerns.

The US Dollar remains strong, with upcoming speeches from central bank officials likely to influence short-term trends. Traders should stay alert to any unexpected shifts as these key events unfold.

Disclaimer: This report is for informational purposes only and should not be considered financial or investment advice. Trading CFDs and forex carries a high level of risk, and you should carefully consider your objectives, financial situation, and risk tolerance before engaging in such activities. Always seek advice from an independent financial advisor if needed.