Saxo Bank’s head of FX strategy John Hardy takes a closer look at how global currencies are being affected by developments in the US - China trade war.
Article / 07 October 2016 at 11:27 GMT

Mid-session Europe: Will NFP pile pressure on gasping GBP?

Saxo Markets


Foreign exchange

The sharp drop of the GBP overnight laid the foundations for a turbulent day. GBPUSD flash crashed 6.1% amid thin liquidity in the Asian session.  In fact, European markets are trading lower ahead of this afternoon’s US nonfarm payroll data.  

A bullish surprise is still in the cards and would add to Wednesday's strong ISM non-manufacturing release, which again would increase the likelihood for a Fed rate hike in November and keep the heat on GBPUSD.


  • US September Change in Nonfarm Payrolls (172,000 expected GMT1230)

  • US September Unemployment Rate (4.9% expected GMT1230)

  • US September Average Hourly earnings (GMT1230)

  • Canada September Net Change in Employment; Unemployment rate (GMT1230)

Forex developments

Very edgy trading in most G10 currencies following the GBP crash overnight.

EURUSD: EURUSD is seen flat at 1.114, erasing the losses of the early morning. USD index getting more strength, having breached above 97 in anticipation of US non-farm payrolls coming out at 12:30 GMT today. 

GBP: Cable (GBPUSD) continues to be traded lower after a failed attempt to breach above 1.2475, currently bouncing widely around 1.23-1.235 levels.  While markets are still looking for the grounds of the overnight move, hard talks arising around BoE monetary policy may get shifted from potential rate cut and funding of country’s account deficit equal to 6% of GDP. GBPJPY traded near 128.16, EURGBP – above 0.90. 

NZD attempting to recover during the latest hour, bouncing from the minimums of 0.71 to 0.7145 in NZDUSD, which is still making it nearly -0.3% during the day.

FX Options volatilities

GBPUSD vols spiked with the very disorderly spot market. Market continue to be very illiquid and vols are reacting quick to moves in the underlying

Fixed income




European markets are trading lower ahead of this afternoon’s US non-farm payrolls data. STOXX Europe 600 is down approx. 0.90% with Energy and Financial stocks outperforming. The overnight move in sterling is supporting the FTSE which is currently up nearly 1%.

TGS is up 4.5% after a positive trading update where the company raised 3Q guidance. Remaining within the energy sector, Total is roughly unchanged after confirming the sale of its chemicals unit to Carlyle Group for $3.2 billion.

Vodafone is to buy Spectrum in India for INR 202.8 billion to enhance their capacity and data speed in the region.

A number of companies have been upgraded / downgraded, notably:
Schibsted - removed from Goldman’s conviction list – down 4%
Easjey - cut to neutral by BofAML – down 4%
DS Smith – Barclays start coverage with overwight – up 3.5%

The replay of our Morning Call can be found here.

Join our Weekly OptionsLab on Wednesday  to find out more on covered call strategy.

Read more

Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.

The future of GBP and EUR remain uncertain, but one 
can still have both in one's hands.. Photo: iStock

— Edited by Clemens Bomsdorf

The Global sales Trading desk is a multi-asset team providing customised trading solutions


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail