NFP effect two months ago
As can be seen in the chart above, the EUR/USD had been trading in an upward channel for months until the NFP was released on Dec the 4th (circled in blue), showing a remarkable recovery in the US economy with a surprising 11K jobs lost instead of the widely anticipated 119K job cut.
The initial reaction was a drop of over 200 pips on the day of the surprising announcement and a long lasting downward trend during most of December that reduced the exchange rate for the pair by more than 500 additional pips.
NFP effect last month
On January the 8th (circled in blue) everyone looked for the NFP once more to gain some insight into how real is the US recovery. Speculation rose that the Federal Reserve will raise its interest rates ahead of expectations if the unemployment in the largest economy continues to improve.
Alas, this time there was little green on the screen when the report showed -85K jobs instead of the expected -3K. This has caused the EUR to gain immediately versus the USD by over 100 pips and a further 150 pip in the following week.
NFP this Week
This week all eyes are on the NFP again, this is due to its release on February the 5th at 13:30pm GMT. The consensus is, hope for a positive figure of 13K jobs added during the past month, one of the few positive figures for that indicator in the past year.
Will we be surprised once more?
The AUD interest rate effect on the 2nd of Feb
Interest rates are a key indicator and have a very strong impact on currencies. Just recently we had the AUD rate released on the 2nd of Feb at 3:30am GMT. The market was expecting yet another hike of rates from 3.75% to 4%, in accordance to the recent hiking trend of the RBA.
Unexpectedly, the RBA decided to keep the rates on hold for a while longer and the disappointed investors turned to selling the AUD for an entire hour, dropping it over 100 pips against the USD.
Upcoming GBP and EUR interest rates, what will be their effect?
This week we have 2 more interest rates released on Thursday, Feb the 4th. One is for the GBP, released at 12:00am GMT and the other is for the EUR, released at 12:45am GMT.
Most analysts agree that none of the Central Banks above will raise the rates just yet. The very same analysts expected a hike on the AUD. Will they be wrong again?
If any of the rates go up, we can expect a strong reaction similar to what happened to the Aussie but in the opposite direction. A higher rate would most likely strengthen the currency of the respective country in a blitz.
Bank of England and European Central Bank’s press conferences
Even if none of the rates change, we can expect some volatility as each of the central banks hold a press conference in which they would disclose vital information about each of the economies.
The UK press conference is tentative but tends to be held right after the rate announcement (12:00am GMT) and would be accommodated by the Asset Purchase Facility which will inform us of the amount of money the Bank of England is going to create, an extremely important report in its own merit.
The ECB will hold its conference at 13:30pm GMT.
Make sure not to miss all the excitement!
