The U.S. dollar suffered a significant correction after the ISM Manufacturing index showed an unexpected contraction in August, raising doubts about global growth optimism. The British pound started to rise against the greenback in the wake of an unexpected strong U.K. manufacturing PMI, showing signs of expansion in the U.K. after the Brexit vote. Even though our buy order in the GBP/USD was triggered slightly later due to high slippage around the release time of the U.K. data, we were able to get a piece of the pie and secure some profit.
The euro flirted with the 1.12-level on the back of a weakening dollar and it will be interesting to see whether the euro is able to hold onto its higher price level going into the highly anticipated U.S. jobs report. Economists predict job growth will slow to 180k in August from 255k in July. While traders are waiting for the payrolls to determine the direction in the market, there is a risk that the outcome could disappoint the market’s high expectations. However, we will prepare for both bullish and bearish scenarios but advise traders to trade the payrolls report with caution.
The U.S. Jobs Report is scheduled for release at 12:30 UTC. Sterling traders should also keep an eye on the U.K. Construction PMI due at 8:30 UTC.
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