Risk off as uncertainty dominates

The FX market has started the week with a risk-off tone despite Friday’s solid US jobs report. January’s non-farm payrolls increased by a larger-than-expected +257k against a forecast of 228k and revisions for November and December added a further 147k. The good news didn’t stop there as the participation increased by two tenths to 62.9% whilst average hourly earnings recovered from a 0.2% decline in December to a lofty 0.5% increase, taking the yearly average to 2.2%.

The risk-off tone in the Asian session was fuelled by disappointing trade data from China and further tough talk from Greece on its attempts to renegotiate the terms of its bailout with the EU and IMF. The China Q4 trade surplus widened to $60.3 billion versus a forecast of $48.9 billion as imports fell 19.9% while exports also declined 3.3%. This has resulted in economists calling for further policy easing from the PBOC with this latest data blip highlighting the deteriorating domestic picture. Greek Prime Minister Alexis Tsipras hardened his stance in recent days and plans to roll back austerity whilst rejecting an international bailout extension. He continued to reiterate that Greece will be unable to service its debt and would instead seek a bridge loan. The former Federal Reserve Chairman Alan Greenspan commented on Sunday that a Greek exit from the Euro was ‘inevitable’.

The data calendar is sparse today as this week’s highlight consists of the BoE’s quarterly inflation report on Thursday, with US retail sales following on the same day. On Friday, Europe focuses on Q4 GDP data.

IMM positioning data reveals US dollar longs have increased by $1.7 billion to $47.8 billion and just below the one-year high of $49.4 billion as EURO, Australian dollar and Canadian dollar short positioning increased.

EUR/USD
Supports  1.1260-1.1105-1.1000  | Resistance 1.1405-1.1530-1.1680

USD/JPY
Supports  118.30-117.25-116.80 | Resistance 119.35-120.85-122.00

GBP/USD
Supports 1.5220-1.5180-1.5105 | Resistance 1.5330-1.5388-1.5450