Jun 06 2008
Nonfarm Payrolls On Tap
The Greenback experienced a mixed day in the trading market, seeing early day gains against major currencies like the JPY and CHF, and losses against the EUR and GBP. The oft traded EUR/USD cross saw a 200+ pip gain yesterday, on the heels of an apparent change in the outlook of Euro interest rates as well as fears over today’s upcoming Non Farm Payroll figures from the US.
Yesterday was a relatively quiet day on the US economic calendar, as Unemployment Claims headlined the Natural Gas Storage and a speech by Philadelphia Fed President Plosser. Unemployment Claims were down by 18,000 from last week to 357K, but speculation over the failing housing markets as well as concerns over a possible 100K drop in NonFarm Payrolls, sent the dollar on a bearish run, most notably against the EUR. Reports of nearly 1 million homes foreclosing in the US have sent a chilling reality to many investors that the US is still ripe with economic issues.
Remarkably the USD had hit a 4 week high in the early hours of trading on Thursday, dipping below 1.54 support levels, before rocketing back over 1.56 towards the evening GMT. The turn around happened in large part to hints given by European Central Bank (ECB) President Jean-Claude Trichet, that the ECB would raise interest rates in June or July.
Looking ahead to today, the USD will be in the forefront of the news, as we expect a batch of significant market making news. Unemployment Rate, Average Hourly Earnings, a speech by Fed Governor Kroszner, Wholesale Inventories and Consumer Credit are all on tap and will be highlighted by the 12:30 GMT release of the Nonfarm Payrolls. The all important employment figure is forecasted to drop by anywhere between 30K and 80K more than last months fall of 20K. A drop in payroll figures this month will mark the 5th consecutive month that NFP figures (one of the more important on the US calendar) will fall. History has shown us that the market becomes volatile in and around the time of the NFP release. With the current trend of the USD against the EUR, expect to see the EUR/USD cross continue its bullishness. It is likely that the USD will see bearishness throughout the market on Friday against the rest of its major rivals.
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