In FX, the USD traded in negative territory as the USD Index, a measure of the strength of the USD against a basket of currencies, was contained below the 99 level. Commodity linked currencies suffered further on the back of a further decline in the price of crude oil with the AUDUSD breaking below the 0.7400 level while the JPY picked up steam on safe haven buying to print 100 pips lower at the 112.00 mark. The GBPUSD remains bid, holding the 1.2900 level despite local council elections in the country.
In commodities, gold consolidated its $40 drop since the beginning of the week to bottom out at 1225 before buyers resurfaced to recapture the 1235 level as uncertainty looms. Crude oil suffered a massive sell off yesterday and in the Asian session, adding to this week’s miseries as we saw the commodity lose over 10% since Monday. The selloff comes amid oversupply concerns as markets adopt a cynical view on whether OPEC can maintain the oil supply freeze.
Today’s key data release come in the form of the release of the Non-Farm Payroll figure form the USA, expected at 194K, higher than last month’s 98K. With the expectation priced in, any shocks will see the USD and gold react accordingly with a better than expected release likely to see the USD strengthen while gold falls, while a worse than expected release is likely to see the USD fall while gold rises.
To top off the week, we see markets turn to Fed Chair Yellen`s speech, in which they will closely watch to see if she releases any hints regarding the outlook of the FED regarding the US economy. Should she strike a more hawkish tone, we would see the USD strengthen across the board while a more dovish tone, will see the USD weaken across the board.