The UK’s jobs data missed analysts’ estimates!
Will Guppy’s selloff extend to the next trading sessions?
Before moving on, ICYMI, yesterday’s watchlist looked for a possible GBP/CAD range breakout after a round of UK reports fueled recession fears. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
UK to enter recession this year, think-tank NIESR forecasts
US 2-year Treasury yield briefly tops 10-year rate, its first inversion since early April
NZ food prices up by 0.7% in May vs. 0.1% uptick in April
AU NAB business confidence and business conditions both eased in May as RBA raised rates
Japan’s industrial output dropped for the first time in three months, down 1.5% in April
UK unemployment rate up from 3.7% to 3.8% in the three months to April, the first uptick since late 2020
UK claimant count change clocks in at -19.7K vs. -40.3K expected
UK average earnings slows down from 7.0% to 6.8%
Eurozone ZEW economic sentiment at 9:00 AM GMT
Germany’s ZEW economic sentiment at 9:00 AM GMT
Canada’s manufacturing sales at 12:30 pm GMT
US PPI reports at 12:30 pm GMT
Japan’s core machinery orders at 11:50 pm GMT
AU Westpac consumer sentiment at 12:30 am GMT (June 15)
China’s industrial production, retail sales, unemployment rate at 2:00 am GMT (June 15)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: GBP/JPY
Guppy was trading at 164.00 before the UK printed worse-than-expected labor market numbers.
For one thing, the unemployment rate edged higher from 3.7% to 3.8% and registered its first uptick since late 2020.
The bigger red flag was the decline in real wages or the wage value adjusted for inflation. The report showed that regular real pay shrank by 3.4% in April alone. That’s the sharpest annualized decline in at least 20 years!
It’s no wonder GBP/JPY noped out of the 164.00 and 50% Fibonacci retracement levels. The pair is now trading closer to 163.00 and it doesn’t look like there are enough buyers to stop more red candlesticks from forming.
Pay close attention to today’s risk sentiment to see if Guppy can get enough momentum to drop to the 162.25 previous lows. European bourses and US index futures are seeing some demand but the tides could turn as we get closer to the Fed’s policy decision.
If traders continue to price in concerns over high inflation and high interest rates, then GBP/JPY could return to 162.25 or even make new lows in the next trading sessions.
But if we see risk-taking, or if traders buy enough USD/JPY ahead of the Fed event to drag GBP/JPY higher, then Guppy could revisit the 164.00 previous area of interest.