BoE Lowers Tapering Threshold, Spotlight Turns to US NFPs

BOE STANDS PAT, WILL START UNWINDING QE AFTER RATES HIT 0.5%

The US dollar traded quietly against the other major currencies on Thursday and during the Asian session Friday. It traded within a ±0.15% range against all but one. The exception was the British pound, which was found higher against its US counterpart by 0.21%.

GBP/USD — TECHNICAL OUTLOOK

GBP/USD traded higher yesterday, after hitting support at 1.3870. However, the advance was stopped by the 1.3855 barrier, and then, the rate retreated somewhat. In the bigger picture, the rate appears to be trading within a small triangle pattern since July 28th, and thus, although the prevailing short-term trend is to the upside, we prefer to stand pat for now.

US AND CANADIAN EMPLOYMENT REPORTS ON TODAY’S AGENDA

As for today, the spotlight is likely to fall on the US employment report for July. Nonfarm payrolls are expected to have accelerated to 870k from 850k, while the unemployment rate is anticipated to have declined to 5.7% from 5.9%. That said, on Wednesday, the ADP report revealed that the private sector has gained less-than-expected jobs, actually less than half the forecasted number, which tilts the risks surrounding the NFP number to the downside. Average hourly earnings are forecast to have grown 0.3% mom, the same pace as in June, but this will take the yoy rate up to +3.8% from +3.6%.

USD/CAD — TECHNICAL OUTLOOK

USD/CAD traded lower on Thursday morning, but hit support near 1.2475, and then, it rebounded somewhat. Overall, the pair remains below the prior upside support line drawn from the low of June 9th, and thus, we would see decent chances for the bears to take charge again soon and push the rate lower.

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