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FX round-up: GBP mixed, USD down after US payrolls and ahead of France vote

By Andrew Schonberg

Date: Friday 05 May 2017

FX round-up: GBP mixed, USD down after US payrolls and ahead of France vote

(ShareCast News) - Britain's Brexit-weakened currency produced a mixed Friday performance after US non-farm payrolls (NFP) data, with markets already looking ahead to the second round of France's presidential election over the weekend.
Centrist candidate Emmanuel Macron was expected to win, beating the far-right's Marine Le Pen. This was set against a surfeit of political posturing in this week's UK-EU divorce saga.

"The pound has held up well despite all the political hullabaloo between EU and UK government officials," said Michael Hewson, chief market analyst at CMC Markets UK.

UK economic data out this week had pleased the market, but it remained a fact that sterling was encountering firm resistance at about $1.1300.

"Could next week act as the catalyst for further gains with the next (Bank of England) inflation report due?" pondered Hewson.

At about 17:05 BST, sterling was up 0.24% to $1.2954. It was down on the loonie, kiwi and rand, but up on the aussie and yen, and ahead 0.13% to €1.1781.

"The euro has had another cracking week on the back of further evidence of a strengthening European economy and the likelihood of a Macron presidency," said Hewson.

Meanwhile, the dollar-spot index was down 0.18% to $98.623 after closely watched US non-farm payrolls (NFP) data topped expectations and the country's jobless rate ticked lower.

NFP rose 211,000 in April, against a downwardly revised 79,000 gain in March and beating views for a 185,000 jump. The US jobless rate was 4.4%, from 4.5% and below expectations for 4.6%.

Hourly pay was up 0.3% to $26.19, while over the year, it rose 65 cents or 2.5%, down from 2.6% the month before.

"Currency watchers immediately focused on the worryingly weak wage growth instead (of the NFP)," said David Lamb, head of dealing at FEXCO Corporate Payments.

This sent the dollar sliding against both the euro and the pound, he said.

"The bearish response is more a testament to the frothiness of expectations rather than any inherent weakness in the US economy," opined Lamb.

This came after the US Federal Reserve held interest rates unchanged earlier in the week, with a rise now expected in June.

Neil Wilson, senior market analyst at ETX Capital, said today's NFP data was just right to nail on a June rate hike, but insufficient to make him think the Fed would become more hawkish.

"We've seen a touch of volatility in the dollar but not a lot to worry about," said Wilson.

"The numbers were more than enough to confirm the base case that the Fed will continue with two additional hikes this year but taken alone does nothing to suggest policymakers should turn more hawkish than they have been."

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