Market Spotlight: Bar Set Low For Today's NDP Release

USD On The RiseIt’s been a good start to the year for the US Dollar which rallied through the week, driven by the hawkish December FOMC minutes and a bumper ADP employment print. Focus now shifts to the headline event and the first US labour reports of the year. A buoyant Dollar on the back of yesterday’s ADP bonanza tells you that a tight labour market is good for USD, seemingly. With that in mind, the outlook today is for the US Dollar to rally if the NFP beats forecasts.Expectations for TodayIndeed, given that the forecast today is for 200k down from 263k prior, the bar is set quite low for a USD rally. Away from the headline reading, the unemployment rate is forecast to remain unchanged at 3.7% while wage growth is set to weaken to 0.4% from 0.6%. If seen, a drop in wages should help fuel expectations of a further cooling in US inflation ahead of next week’s CPI print, keeping USD supported on better growth projections. However, any unexpected uptick in the unemployment rate might dampen the rally, if seen.Where to Trade?The current meltdown in GBP looks likely to continue near-term with PM Rishi Sunak continuing to lose public support in the latest polls. Political uncertainty, resurgent covid levels, industrial action and the cost-of-living crisis are weighing heavily on GBP here making it a prime target for further losses against USD.Technical ViewsGBPUSDThe move back under the 1.2195 level spells trouble for GBPUSD. Now trading below the rising channel from last year’s lows, GBPUSD looks vulnerable to a run down towards the 1.474 level next if USD rallies today, in line with bearish momentum studies readings.