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Pound weaker in Asia after London attacks, Caixin services ahead

6/5/2017, 10:47:00 AMBasics of Trading
Pound weaker in Asia after London attacks, Caixin services ahead

The pound was quoted weaker in early Asia on as markets react to a weekend attack in London that killed seven after a van mowed down pedestrians on London Bridge and attackers from the vehicle fanned out and started stabbing people at nearby restaurants and bars.

GBP/USD was quoted at 1.2872, down 0.08%. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted at 96.71.

Ahead, the Caixin Services PMI from China will be closely followed with a reading of 51.4 expected for May, down from 51.5 in April.

Last week, the dollar fell to seven month lows against a currency basket on Friday after a poor U.S. employment report added to uncertainty over the outlook for rate hikes by the Federal Reserve in the second half of the year.

The U.S. economy added 138,000 jobs last month the Labor Department reported, falling far short of economists’ expectations for 185,000 new jobs.

Figures for March and April were revised to show that 66,000 fewer jobs were created than expected, indicating that the labor market may be losing momentum, even though the unemployment rate ticked down to a 16-year low of 4.3%.

Most analysts still believe the disappointing data will not stop the Federal Reserve from raising interest rates at its meeting later this month.

Traders now see a roughly 88% chance of a Fed rate increase on June 14, down slightly from 89% before the jobs report.

But the slowdown in jobs growth could temper expectations for a pick-up in economic growth in the second quarter after the economy expanded by just 1.2% year-over-year in the first quarter.

Events in Europe are likely to set the tone for global financial markets this week, ahead of the European Central Bank policy meeting and British general election. Chinese data on trade and inflation will also be closely watched.

In the U.S., market players will pay close attention to former FBI director James Comey's testimony to the Senate Intelligence Committee, in a hearing that could add to difficulties facing the Trump administration.