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Investors have been left wondering whether today’s sluggish jobs data may have any implications on the Bank of England’s rate decision next month.

Following the relentless rally throughout last year, the price action in the major US stock market indices over the last six months has felt like purgatory.

If this week’s data turn out to be overall better than forecasts then we would favour looking for bullish setups on the pound against her weaker rivals such as the yen. Otherwise we would favour looking for bearish setups on the GBP/USD, because of our current bullish bias on the dollar.

If you were just to look at the where the major currencies are trading relative to yesterday’s US close, you’d think it’s been a pretty quiet day; after all, none of the majors are trading more than 0.3% from the day’s open as of writing.

The biggest themes in the markets this week can be summarised as: (1) US dollar strength, (2) weakness in foreign currencies – particularly where the central bank is still dovish such as the Japanese yen and Swiss franc – and (3) positive sentiment on Wall Street.

USD strength resurgence remains intact with USD/JPY bullish breakout sighted.

Heading into this year, there was a convincing case for a dollar rally. After all, the world’s reserve currency had fallen sharply against most of its major rivals in 2017 as the luster of the pro-dollar “Trump Trade” wore off and the realities of governing set in.

The key themes in the FX markets over the past few days have been (1) dollar strength and (2) yen weakness.

The US dollar has resumed its rally after starting the first week of July on the back foot when it was hit by profit-taking following a three-month winning streak.

USD strength resurgence but cautious for USD/JPY bulls as it is now testing the 112.30 major resistance.

As we noted in our Bank of Canada Preview report, today’s BOC meeting was never really about if the central bank would raise interest rates (even after last night’s escalation in the global trade war); instead, traders were focused on BOC policymakers’ outlook for future economic growth and what that would mean for interest rates moving forward.

Trade war concerns resurfaced overnight when news broke out that the US will announce tariffs on further $200 billion of imports from China with levies of 10% on the products.