• GBP/USD -1.1%
• EUR/USD -0.7%
• GBP/JPY -0.7%

GBP/USD

British Pound Takes A Beating: Already slightly downtrodden on less than expected services data, the British pound was hammered on the session following the release of U.S. employment figures.  Rising less than expected versus consensus figures, the employment data was still reflective of a tighter labor market.  As a result, wage costs rose, 3.3 percent, and prompted speculation of further rate hikes by the Federal Reserve.  Wage costs are referred in inflationary gauges as it measures rising costs that effect corporate bottom line.  Comparatively, leading the sterling to boast a negative bias, was todayââ,¬â"¢s slightly lower manufacturing reading.  According to the Chartered Institute of Purchasing Managers, the benchmark index fell to a reading of 57 from the previous monthââ,¬â"¢s 57.9.  More incremental than effective, traders took note to see the new business index falling below previous levels as well as the employment component.

Rumorville: With bids run through at the 1.7700 figure from this morning, further bids lower were subject to the immediate decline witnessed following the report.  Now, consolidating, bidding looks to be temporary, keeping the underlying at the 1.7600 figure with interest below at 1.7585 and 1.7530.  However with heavy selling considerations at 1.7660 and 1.7635, the underlying looks to be under pressure up till the close.

EUR/USD

Euro Data Doesnââ,¬â"¢t Relieve The Pain: A full slate of Euro zone data could not prevent the bearish onslaught on the single currency following the U.S. employment release today.  On the docket, services sector performance declined in all but one country in the region, notably Germany.  This is relatively in line with what the market saw just days ago as manufacturing activity dipped in all but one region as well.  Additionally, consumer price estimates were in line with earlier consensus as retail sales figures were only mildly improved.  With such tepid data in the air, traders sided with a higher probability that U.S. interest rates are heading for a rise compared to a slower move by the European Central Bank.  Even though ECB President Trichet hinted at a continuance of the previous 25 basis point rate hike, the decision may be late in coming compared to the higher valued 4.50 percent interest rate offered by dollar denominations.

Rumorville: Already experiencing a bid from the interests at 1.1980/60 area and below at 1.1935, the euro single currency looks to consolidate higher heading into the weekend close.  The bounce, however, looks to be dead cat in nature as continued selling resides closely above at 1.2030/40 with futher offers at 1.2080/85.

GBP/JPY

Pound Selling Spills Over: Even with no economic data for immediate release, traders pared back previous carry trade positions and reflected pound bearishness in the GBPJPY cross.  With plenty of dour data, the market decided to take profits and unwind positions before the weekend as players look to next week in finding data in favor of a near term rate hike consideration by Bank of Japan policy officials.  First up will be staid coincident and leading economic index reports.  Ultimately a compendium of previous economic factors, both reports will most likely follow consensus leading to little activity or anticipation.  The bulk of focus will be saved for later in the week as consumer confidence and household spending figures are released.  Should both bits of data be to the upside, look for considerable speculation in the yenââ,¬â"¢s favor.  Consumer spending has underpinned the worldââ,¬â"¢s second largest economy and should continue to do so given the durability of recent optimism.

Rumorville: With sterling orders already stated above, yen considerations follow relatively close as an option barrier battle is rumored at the 119.50 price figure.  Once tripped, traders are eyeing the even 120 figure with talk of new stops below at 118.80/60.

Richard Lee is a Currency Strategist at FXCM.