British pound recovered part of heavy losses from Asian session but remains at shaky ground in early European trading, holding in 1.2450 area. The pound crashed in thin Asian trading, falling around 6% on spike to 1.19 zone, after French President Hollande said that The European Union need to remain firm with Britain, which must suffer the consequences of leaving the EU, in order to save the union from existential crisis.
The pound was already vulnerable after British PM Theresa May set the date to start divorce process from the EU, with additional pressure on the pound coming from remarks by German Chancellor Angela Merkel, who urged European business leaders to be firm in negotiations with their British counterparts and not to compromise EU’s principles of freedom of movement.
This was the second sharp fall of the pound since Brexit vote, which so far lost around 20% after Britain’s vote to leave the EU in June.
However, some commentators do not rule out the human error, so called ‘Fat Finger’ in this story, blaming also the algorithm trading for a sharp fall in thin market conditions, but the pound remains under strong pressure.
Targets at 1.2500 and 1.2000 zone that were seen in short / medium term, have already been met and strong downside risk will remain on the table for sterling.
Sharp fall of British pound further supported the US dollar, which already stands on firm ground against its major counterparts, awaiting today’s key release, US jobs data.
The greenback was higher against other majors in early Friday, supported by recent upbeat US data. US Weekly Jobless Claims that were released on Thursday were also positive. Claims dropped 5000 during the previous week, against forecasted rise by 3000.
Market participants are awaiting the U.S. nonfarm payrolls report due later in the day for further indications on the strength of the job market, as the Federal Reserve has indicated that future interest rate decisions will be data-dependent. Strong prints of NFP are needed to cement Fed’s decision to hike interest rates by the end of the year, with December meeting seen as key event.
Elsewhere, the Euro fell further against the dollar and probes below strong support at 1.1120 zone, as technical studies gained firm bearish tone. The single currency is eyeing today’s jobs report from US, with release at / above forecasted level, expected to give strong boost to the US dollar and weaken the Euro further.
The dollar remains firm against Japanese yen and holds within narrow range under Thursday’s fresh high at 104.15, which lies just ahead of strong technical resistances at 104.30/42.
Crude oil continues to trend higher, supported by OPEC production cut talks and recent surprise fall of US crude stocks. WTI oil firms above psychological $50 level, with next target at $51.65 being in focus.
Brent oil met its target at $52.83 in early European trading, with bulls eyeing next one at $55.00 zone.
Spot Gold remains under strong pressure, with near-term price action consolidating Thursday’s fresh fall that met its target at $1249. Yellow metal is in steep descend and is on track for the strongest weekly loss since October 2014, driven lower by strong dollar and risk sentiment on hopes of US rate hike in the short-ter.
Gold may extend weakness towards targets at $1220 and $1210, on solid US jobs numbers today and possibly attack psychological $1200 support.

Highlights of the day

America
U.S. Non-Farm Payroll data for September due today, could affect Fed intentions of rate hike this year.
U.S. jobs figures are forecast to show economy create 175,000 jobs in September, after
August data disappointed by showing the economy added only 151,000 jobs in the month.
The FOMC left rates on hold in September, with three members dissenting on that decision.
Fed Rate Monitor Tool puts the odds of a December hike at some 60%.
US Unemployment Rate is expected to remain unchanged at 4.9% in September.
Data is due at 12:30 GMT.

Important levels
GBPUSD
Pound was again the top loser of the session, as overnight’s crash was triggered by comments from top European officials. Sterling dipped below 1.2000 handle and hit 200% Fibonacci expansion of extended third wave from 1.3055. The pair made quick recovery of over 400-pips after crash and currently trading around 1.2450. Strong descend was followed by correction, which is expected to stay under Asian high at 1.2620, where broken bear-channel support line reinforces resistance.
EURUSD
The Euro is in red for the second day and cracked strong technical supports at 1.1122 and 1.1108. Final break below daily cloud has established firm bearish tone, with daily close below 1.1100 handle, needed to open targets at 1.1045 and 1.1000. Broken daily cloud base, also broken bull-trendline, offers strong resistance at 1.1170 zone.
USDJPY
Steep ascend extended above daily cloud and came ticks ahead of key resistances at 104.30/43. Firm break here is needed to confirm broader recovery and open immediate barriers at 105.00 and 105.60.The pair is on track for strong weekly bullish close, which will add on overall strong bullish tone. Broken daily cloud top at 103.22 offers solid support and should contain corrective dips., Market Analysis