- The number of orders to acquire the British Pound dropped from 61 to 53%
- 67% of all open positions are long.
- Immediate resistance is at 1.2184
- The closest support is around 1.2130
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Upcoming Events: US Average Hourly Earnings, US Non-Farm Payrolls, US Unemployment Rate, UK NIESR GDP Estimate, US Federal Budget Balance
The number of Americans filing for unemployment benefits rose more than expected last week, official figures showed on Thursday. The US Department of Labour reported initial jobless claims rose to 243,000 in the week ended March 3, up from the preceding week's record low of 223,000. Meanwhile, market analysts expected claims would climb to 239,000 claims during the reported week. Last week marked the 105th consecutive week of claims below the benchmark 300,000 level. Analysts state that the US economy is at or near full employment, with companies struggling to find qualified candidates for job openings. The strong performance of the labour market and rising inflation would probably force the Federal Reserve to raise rates at its next meeting on March 15. The Labour Department said there were no special factors influencing claims data. The four-week moving average of initial claims, considered a better measure of the labour market trends, advanced 2,250 to 236,500 last week.
Thursday's report also showed continuous jobless claims dropped 6,000 to 2.06 million in the week ending February 25, while their four-week moving average fell 5,250 to 2.07 million. The US Dollar traded little changed after the release, as investors awaited Friday's NFP report.
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US NFP is the most anticipated event
Today all eyes are on the US Non-Farm Payrolls and other relevant data. The Non-Farm Payrolls present the number of new jobs created during the previous month in all non-agricultural businesses. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive for the USD, while a low reading is seen as negative, although previous months' reviews and the unemployment rate are as relevant as the headline figure, and therefore market's reaction depends on how the market assets them all. Another important event will be the US Unemployment Rate. It is a percentage that surges from dividing the number of unemployed workers by the total civilian labor force. It represents the percentage of people actively seeking unemployment and willing to work. Usually, a high rate is seen in recessionary economies, while on the contrary, a growing economy sees its unemployment rate decreasing. Therefore, a decrease of the figure is seen as positive for the USD, while an increase is seen as negative, although by itself the number cannot determine the markets move, as it depends on the headline reading – the Non-Farm Payrolls. Furthermore, the Average Hourly Earnings are due. They are a significant indicator of labor cost inflation and of the tightness of labor markets. The Federal Reserve Board pays close attention to when setting interest rates.
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GBP/USD seen falling after US NFP
The Cable managed to retain its position on Thursday, as the lack of potential market movers contributed to relatively flat trade. Today everything depends on the US NFP data, a positive reading of which is to spark more bearish momentum and is likely to cause a drop below the immediate support, namely the monthly S2 and the lower Bollinger band. Consequently, the channel's lower boundary around 1.20 might even be put to the test. Technical indicators also suggest the Sterling is to suffer another loss today, but in case the NFP data surprises with a weaker reading the 1.23 mark is expected to be the intraday ceiling.
Daily chart
© Dukascopy Bank SA
Thursday's flat trade caused the Cable to break out from the descending channel pattern, at least on the hourly chart. In either way, the GBP/USD pair's trend will remain bearish unless the 1.24 mark is retaken in March. The Pound is now closer to the 200-hour SMA, which could spark more GBP-selling, confirming the possibility of stronger NFP data weighing on the pair.Hourly chart
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Traders mostly bullish
There are 67% of all open positions being long today, compared to 65% previously. The number of order to acquire the British Pound dropped over the day, namely from 61 to 53%.
A slightly more optimistic situation is observed elsewhere. For example, 69% of positions open at OANDA are currently long. This is more than the share of shorts (31%), barely sufficient for the sentiment to be called bullish. Meanwhile, sentiment at Saxo Bank is also bullish, with 72% of traders now being long and the other 28% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
© Dukascopy Bank SABy the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 52% of survey participants believe so. While the current price is around 1.22, the average forecast for June 10 is 1.2341. The 1.20-1.22 interval is now the most popular price interval, having 19% of the votes, while on the second place are 1.18-1.20 and 1.28-1.30 price ranges, both with 15% of poll participants choosing them. Furthermore, the 1.30-1.32 interval was chosen by 11% of the voters.