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Trading conditions were a bit tight during the morning London session, likely because forex traders were hunkering down for the NFP report.

The session wasn’t a complete snooze fest, though, since the pound and Greenback were broadly higher during the session.

The Kiwi is also noteworthy since it closed the session lower across the board despite the risk-friendly vibes in Europe.

  • German industrial production m/m: -0.5% vs. 0.3% expected, 0.1% previous
  • French industrial production m/m: 1.2% vs. 0.8% expected, -1.6% previous
  • French trade balance: -€4.1B vs. -€5.9B expected, -€5.4B previous
  • Swiss foreign currency reserves: CHF 749B vs. CHF 753B previous
  • Halifax U.K. HPI m/m: -1.4% vs. 0.3% expected, 0.7% previous
  • Euro Zone retail sales m/m: 0.1% vs. -0.2% expected, -0.8% previous
  • U.K. consumer inflation expectations: 3.2% vs. 3.0% previous
  • Euro Zone revised Q3 GDP q/q: no change from 0.2% as expected
  • Euro Zone revised Q3 GDP y/y: 1.6% vs. no change from 1.7% expected

Major Events/Reports:

NFP Friday!

Today is another U.S. non-farm payrolls (NFP) Friday! And normally, volatility and directional movement tend to be relatively limited in the run-up to the NFP report as forex traders brace themselves for the top-tier event.

Well, today was certainly a normal day since trading conditions were a bit tight.

By the way, if you’re interested on what happened last time and what’s expected this time around, then you may want to read up on Forex Gump’s Event Preview.

Risk-friendly vibes ahead of NFP (but deteriorating)

Risk-taking was clearly the name of the game in Europe since practically all of the major European equity indices opened higher and then proceeded to rake in even more gains.

However, there were signs of returning risk aversion later since the major European equity indices began to encounter sellers, forcing them off their highs.

Market analysts suggested that the appearance of risk-taking may just be due to short-covering and/or bargain buying after European shares got a severe beating this week.

As for the later signs of risk aversion, the reason for those ain’t very clear. However, it’s possible that the usual skittishness ahead of the NFP report may have weighed on risk sentiment.

  • The pan-European FTSEurofirst 300 was up by 1.07% to 1,368.50 but off the day’s high at 1,373.74
  • Germany’s DAX was up by 0.52% to 10,867.13 but off the day’s high at 10.,925.66
  • The blue-chip Euro Stoxx 50 was up by 0.99% to 3,075.95 but off the day’s high at 3,089.65

Major Market Mover(s):

USD

Price action on USD pairs was rather choppy, but the Greenback somehow closed out the session on top. That’s not really saying much, though, since the Greenback’s gains weren’t really all that impressive.

Anyhow, there weren’t any apparent catalysts for the Greenback’s rise, but pre-emptive positioning ahead of the NFP report is a possible reason.

USD/JPY was up by 7 pips (+0.07%) to 112.84, USD/CHF was up by 4 pips (+0.04%) to 0.9932, USD/CAD was up by 4 pips (+0.03%) to 1.3395

GBP

The pound was the second top-performing currency of the session after the Greenback, which is also not that big of a deal, given the pound’s rather small gains.

What’s interesting about the pound, however, is that price action on GBP pairs was more uniform compared to USD pairs.

And the pound caught a soft bid at around 9:45 am GMT, but the only apparent catalyst at the time was the BOE’s consumer inflation survey.

However, that report is only considered a low-tier report. Also, the report wasn’t really all that positive for the pound. The report showed, for example, that “19% of respondents thought that interest rates should ‘go down’, up from 17% in August.”

GBP/JPY was up by 10 pips (+0.06%) to 144.04, GBP/AUD was up by 8 pips (+0.05%) to 1.7708, GBP/NZD was up by 20 pips (+0.11%) to 1.8589

NZD

The Kiwi actually opened the session strong, thanks to the risk-friendly vibes at the start of the session.

However, the Kiwi got hit by selling pressure when risk aversion later showed signs of returning. And apparently, selling pressure was stronger.

NZD/USD was down by 8 pips (-0.12%) to 0.6864, NZD/JPY was down by 4 pips (-0.05%) to 77.46, NZD/CHF was down by 4 pips (-0.06%) to 0.6819

Watch Out For:

  • 1:30 pm GMT: U.S. non-farm payrolls (+198K expected vs. +250K previous), jobless rate (steady at 3.7% expected), and average hourly earnings (+0.3% expected vs. +0.2% previous); read Forex Gump’s preview
  • 1:30 pm GMT: Canada’s net employment change (10.5K expected vs. 11.2K previous) and jobless rate (steady at 5.8% expected)
  • 3:00 pm GMT: University of Michigan’s preliminary consumer sentiment (97.0 expected vs. 97.5 previous)
  • 3:00 pm GMT: U.S. final wholesale inventories (no change from 0.7% expected)
  • 5:00 pm GMT: U.S. Fed Governor Lael Brainard will give a speech
  • 8:00 pm GMT: U.S. consumer credit ($15.1B expected vs. $10.9B previous)