GBP

Sterling gained 0.4% against the dollar, amid broad based greenback weakness on Thursday as the market positioned itself for the US monthly non-farm payroll report due for August released later today. A modest decline in US bond yields indicated that the market may now be pushing back expectations that the Federal Reserve Bank will begin to taper its massive pandemic stimulus scheme this month. Against the Euro, the pound remained little changed. According to a report in the Daily Telegraph, Boris Johnson is due to announce a hike in National insurance as early as next week to pay for the governments long awaited social care reforms. The hike which would affect 25 million people has apparently divided the cabinet, with the Prime Minister favouring a 1% increase, the treasury 1.25% and Health secretary Sajid Javid 2%.

EUR

The euro continued its recent run against the dollar, rising for the sixth consecutive day on Thursday. Although the most important data of the day will be this afternoons employment data from the US, ahead of this month’s PMI surveys for France, Germany and the Eurozone and July retail sales for the euro area will be released. Retail sales are expected to show a mild improvement in July relative to a decline in June.

USD

The dollar sunk to its lowest levels in almost a month against its major rivals in early trading. Key focus today will be the US monthly jobs data. The Federal Reserve Bank has made employment recovery a condition for tightening monetary policy and a strong reading could revive hopes of earlier tapering of their bond buying scheme. According to a Reuters survey of economists, the consensus opinion is the report is likely to show an increase of 750,000 jobs, however estimates range from 375,000 to just over 1 million. Should job growth in August meet expectations it would leave employment around 5 million jobs below its pre pandemic peak in February 2020.

Economic Calendar

9.00 am EUR French PMI’s
9.00 am German PMI’s
9.30 am UK Services PMI
10.00am EUR retail sales
1.30 pm US Non-farm payrolls
3.00 pm US services PMI