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Job data being released in the US and New Zealand, bringing optimism back to market

  • USD holds gains given optimistic economic outlook
  •  GBP slightly lower as traders focus on BOE’s decision
  •  NZD rises on positive job data

USD traded close to its strongest region in more than two months against Euro and Yen on Thursday, due to the optimistic release from the job market. ADP report saw 174k private jobs added in January, beating expectations for a 49k decline. The increase followed 78k in December, showing that employment is picking up the momentum. Also in this week, we will have US weekly jobless claims and non-farm payrolls as additional tests for the health of the labor market. Other positive news on USD include latest progress on vaccinations. The rollout of COVID vaccines are helping to bring down new infections and expedite economic recovery. Now that Eurozone looks slightly lagging behind US’s recovery speed, USD is getting slightly more appealing against EUR.

GBP traded slightly lower during the previous trading session, falling 0.16% against USD as traders eagerly waiting for Bank of England’s meeting. Most of them are looking for clues on negative interest rates. Per expectation, BOE will likely keep rates at 0.1% and the pace of monthly bond purchasing at £845 billion. Speedy rollout of COVID vaccine is also being deployed in the UK, which may have weakened the calls on BOE to provide further support. Boris Johnson said on Wednesday that, 10 million people had received the first dose of the vaccine. More details on the next phase of the rollout will be disclosed on February 22nd.

NZD traded higher on Wednesday in response to superb employment data for 2020Q4. Employment Change, which measures the change in the number of people being employed, gained 0.6%. It was a strong gain after two successive declines, with expectation previously at 0.1%. Furthermore, unemployment rate fell to 5.3% from 5.6%, with consensus at 5.6%. The market clearly reacted well to these data, bringing NZDUSD slightly higher. The gains are limited given USD’s continuing strength but are in the right direction.