Mid-Day Report: Dollar Steady after NFP and ISM Services, Sterling Lifted by PMI Services

Mid-Day Report: Dollar Steady after NFP and ISM Services, Sterling Lifted by PMI Services
Dollar remains steadily in range against most major currencies in early US session after the release of closely watched employment and services report. Non farm payroll showed that job market in US cut another -663k jobs in March, close to expectation of -654k. Unemployment jumped to 25 years high of 8.5%, meeting consensus expectations. ISM Services cam in worse than expected, dropping form 41.6 to 40.8 in March, comparing with consensus of 42.0. There is little reaction to the data as markets are still digesting recent moves. The greenback and yen remain generally soft.

On the other hand, Sterling is lifted by stronger than expected services data today. PMI Service rose much more than expected from 43.2 to 45.5 in March comparing to expectation of 43.5. UK Halifax house price dropped -1.9% mom in March, slightly deeper than expectation of -1.8%. Sterling is noticeably strong against Euro and EUR/GBP. As mentioned before, recent development argues that EUR/GBP's rebound from 0.8635 has already completed at 0.9494 and further decline could be seen to retest this low first. In other words, Sterling is expected to outperform Euro in near term.

Other economic data released today saw EUrozone PMI services revised higher to 40.9 in March. Swiss CPI dropped -0.3% mom, -0.4% yoy in March, deeper than expectation of 0% mom, -0.1% yoy. Germany import price dropped -0.1% mom, -6.4% yoy in Feb, above expectation of -0.3% mom, -7.8% yoy.

GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4529; (P) 1.4638; (R1) 1.4831; More

GBP/USD's rally is still in progress and reaches as high as 1.4844 in early US session. At this point, intraday bias remains on the upside as long as 1.4647 minor support holds. Whole rise from 1.3654 is treated as the third leg of consolidation from 1.3503 and is now expected to extend further to 1.4984 resistance, and probably further to 100% projection of 1.3503 to 1.4984 from 1.3654 at 1.5135. On the downside, below 1.4647 will turn intraday outlook neutral and bring pull back. But short term outlook will remain bullish as long as pull back is contained above 1.4109 support.

In the bigger picture, a medium term bottom is in place at 1.3503 after GBP/USD completed the five wave sequence from 2.0158 (1.7445, 1.8668, 1.4557, 1.5722, 1.3503). Consolidation from 1.3503 is still in progress with rise from 1.3654 as the third leg. It's still uncertain how such consolidation will develop into but in any case, upside should be limited by resistance zone of 1.5722 and 38.2% retracement of 2.0158 to 1.3503 at 1.6045. On the downside, below 1.4109 will revive the triangle scenario and bring more choppy consolidation between 1.3503 and 1.4984 before resuming the long term down trend.