Markets Eye Strong US Jobs Data

Morning Report: 06.45 London

• This morning, the Australian dollar is leading markets higher despite a ballooning gap in the trade balance. The RBA’s decision to keep rates on hold is a more significant factor though as it is set against the outside prospect of a rate cut.
                         

• The NZD/USD is rallying in sympathy.
                      

                      
• European dollar pairs are on the back foot however, with both the pound and euro under pressure.

• Looking at wider markets, the dollar index is slipping lower for the third day in a row, while the S&P 500 climbed for a fifth straight day last night. The prospect of a later US rate hike is behind this.

Coming up today:

• Today we have Eurogroup and ECOFIN meetings running through the day.

• The afternoon’s main highlight is Canadian and US trade balance at 13.30.

• President Draghi then speaks at 18.00.

• FOMC member Williams speaks at 22.30.

Trade Idea:

• The NZD/USD has the bit between its teeth, rallying against a backdrop of potential rate cuts and Chinese slow down.

This activity can be taken as a sign of underlying strength and a good way to play this is a HIGHER trade predicting that the NZD/USD will close below 0.6550 in 21 days for a potential return of  141%.

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