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Interest rate focus turns to US on nonfarm payroll day

After the excitement of the Bank of England’s Super Thursday where sterling lost over 100 pips against the dollar and nearly the same against the euro, the attention moves to the US where we see the penultimate nonfarm payroll ahead of September’s FOMC meeting. This figure is important following comments from FOMC voting member Lockhart earlier in the week where he strongly suggested September should be the month the Fed moves to increase interest rates for the first time in over nine years. The market expects a figure of 222k with the unemployment rate remaining at 5.3% and once again the average earnings figure will be closely watched as well, expected at 0.2% month on month. All eyes will be on how the dollar and Treasury yields react to today’s figure which have pulled back a little following Wednesday’s poor ADP figure. With both the Federal Reserve and Bank of England emphasising that their decision to raise interest rates remains data dependent, figures like today’s nonfarm payroll have the potential to produce some fireworks.

At the same time there’s unemployment data from Canada so the most action could potentially be in the USDCAD rate which recently hit a 10 year high. Trading at 1.3110 this morning bulls will be watching for a break above the 1.3200/15 level for further gains.

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