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Today’s another NFP Friday, so trading conditions were relatively tight and most currency pairs were milling about in tight ranges.

The pound and the euro were exceptions, though, since the pound spurted higher across the board, while the euro got pummeled broadly lower.

  • Swiss jobless rate: steady at 2.6% as expected
  • German industrial production m/m: -1.1% vs. 0.2% expected, -0.7% previous
  • German trade balance: €15.8B vs. €19.5B expected, €19.3B previous
  • French industrial production m/m: 0.7% vs. 0.2% expected, 0.7% previous
  • French trade balance: -€3.5B vs. -€5.7B expected, -€6.1B previous
  • Swiss foreign currency reserves: CHF 731B vs. CHF 750B previous
  • Halifax U.K. HPI m/m: 0.1% as expected, 1.2% previous
  • Italian retail sales m/m: -0.1% vs. 0.2% expected, -0.1% previous
  • U.K. consumer inflation expectations: 3.0% vs. 2.9% previous
  • Euro Zone revised GDP q/q: unchanged at 0.4% as expected
  • U.S. NFP report coming up
  • Canada’s jobs report also on tap

Major Events/Reports:

NFP Friday!

Today is another U.S. non-farm payrolls (NFP) Friday! And under normal circumstances, volatility and directional movement are usually in short supply as traders brace themselves for the NFP report.

And today was certainly a very normal day since most currency pairs were milling about in tight ranges.

By the way, if you’re planning to trade the NFP report, then you may wanna check out Forex Gump’s Event Preview for the upcoming NFP report.

And while you’re at it, you may also wanna check out Forex Gump’s Event Preview for Canada’s jobs report since that will be released simultaneously with the NFP report.

Transcript of Brexit meeting released

Earlier, the U.K. House of Commons released the transcript of their talks with E.U. Chief Brexit Negotiator Michel Barnier back on Monday.

And after quickly scanning the transcript, the overall message appears to be a softer and conciliatory stance on Barnier’s part.

As for specifics, Barnier said that the E.U. is “open” and wants an “unprecedented relationship” with the U.K., but is also ready if Brexit talks fail:

“We are open; that is our position. We want to establish the closest relationship possible with your country—and I will be saying this in greater detail later—and what will be an unprecedented relationship. We are determined to find an agreement, but I am aware of the risks that lie before us on our road between here and March, and we also are aware of our responsibilities on both sides. That is why I believe we need to be prepared for all scenarios, for all eventualities.”

However, Barnier stressed that the E.U. doesn’t want a “no-deal” scenario and wants to have free trade with the U.K. that’s “very wide in scope“:

“Let me repeat also that the no-deal scenario is not our scenario; it is not my scenario. Let me remind you that the line taken by the European Council—that is my mandate—foresees an ambitious partnership, which will include an ambitious and balanced free trade agreement, very wide in scope; secondly, co-operation in specific sectors, some areas of shared interest, such as aviation, research and universities, just to give you some examples; thirdly, judicial and police co-operation in criminal matters; fourthly, a strategic partnership in the area of security, defence and foreign policy.”

Barnier did say that Ireland is a major sticking point, though. He even warned that “if there is no operational backstop on Ireland, there will not be an agreement.”

However, Barnier did try to sound a bit more conciliatory when he also said that (emphasis mine):

“Brexit without a backstop would create a problem for Northern Ireland, and the inhabitants of the island of Ireland we think are entitled to some certainty regarding the conditions for future co-operation between the two countries.”

“I also think that this will require an effort on both sides, that we should be able to de-dramatise this backstop by describing what it will mean on the ground, having a kind of set of checks that are technical and operational and that would be applied unless and until there is an agreement on the future relationship that would finally settle all these issues, at least partially. So we are open to that prospect. We are ready to simplify these checks, to have them carried out at a number of different places and have checks, thanks to technical means, which could take different forms.”

Tria speaks

Italian Economy and Finance Minister Giovanni Tria was speaking earlier today. And he reiterated the Italian government’s vow to follow the E.U.’s budget rules, while also stating that Italy will respect its commitments to Europe.

Risk-off ending in Europe

The major European equity indices opened mostly higher. However, it soon became apparent that risk aversion was still prevalent since the major European equity indices began erasing their gains and most were even in the red by the end of the session.

And as usual, market analysts were blaming trade-related jitters for the risk-off vibes. Although it’s also probable that markets were just skittish because of the NFP report.

  • The pan-European FTSEurofirst 300 was down by 0.14% to 1,457.88
  • Germany’s DAX was down by 0.17% to 11,934.41
  • The blue-chip Euro Stoxx 50 was down by 0.31% to 3,286.95

Major Market Mover(s):

GBP

The pound was initially range-bound but got rushed by buyers about halfway through the session.

And according to market analysts and price action, the catalyst for the bullish injection was the transcript of Barnier’s discussion with the U.K. Parliament.

GBP/USD was up by 50 pips (+0.39%) to 1.2987, GBP/JPY was up by 82 pips (+0.58%) to 143.94, GBP/CHF was up by 58 pips (+0.47%) to 1.2541

EUR

The euro found buyers early on, thanks to assurances from Tria that Italy will play nice with the E.U. There was little follow-through buying, though, and most EUR pairs began to trade sideways.

Unfortunately (for EUR bulls), the euro later got swamped by sellers about halfway through the session. There were no direct, negative catalysts for the euro, but profit-taking is a possibility since the euro is currently a net winner.

However, it’s also probable that the euro weakened because market players were dumping their euro positions and flocking to the pound since the euro began to encounter sellers at about the same time as the pound began to shoot higher.

EUR/USD was down by 30 pips (-0.26%) to 1.1609, EUR/NZD was down by 53 pips (-0.30%) to 1.7648, EUR/GBP was down by 66 pips (-0.74%) to 0.8930

Watch Out For:

  • 12:30 pm GMT: U.S. non-farm payrolls (+193K expected vs. +157K previous), jobless rate (3.8% expected vs. 3.9% previous), and average hourly earnings (0.2% expected vs. 0.3% previous); read Forex Gump’s preview
  • 12:30 pm GMT: Canada’s net employment change (+5.1K expected vs. +54.1K previous), jobless rate (5.9% expected vs. 5.8% previous), and labor force participation rate (steady at 65.4% expected); read Forex Gump’s preview
  • 2:00 pm GMT: Ivey’s Canadian PMI (61.5 expected vs. 61.8 previous)