Friday May 2, 2008 - 10:08:20 GMT
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Forex Research - Euro Inches Higher As Markets Await Payrolls
squared up their positions ahead of US Non Farm payroll data due to be
released at 12:30 GMT today and EURUSD climbed back towards the 1.5500
figure after a day of battering yesterday that saw the unit lose nearly
200 points against the greenback.
â€¢ Japanese Yen: Takes out 105.00 as risk returns to the market
â€¢ Australian Dollar: Retail Sales beat to the upside
â€¢ Euro: Retail Sales sink once again
â€¢ Pound: Construction PMI declines as housing slumps
â€¢ US Dollar: NFP on tap
Traders squared up their positions ahead of US Non Farm payroll data
due to be released at 12:30 GMT today and EURUSD climbed back towards
the 1.5500 figure after a day of battering yesterday that saw the unit
lose nearly 200 points against the greenback. The buck has been
strengthening all week on the assumption that the US economy may not be
nearly as weak as analysts had previously thought, but todayâ€™s NFP
report could prove to be the moment of truth that resolves the
argument of whether the US is in the midst of a serious recession or
simply in a slowdown.
Our pre NFP analysis Will Non-Farm Payrolls Recover provides
inconclusive evidence with 6 leading indicators pointing to further
deterioration in the labor market while 3 hint at improvement. The NFPs
are notoriously difficult to predict for a host of reasons including
the birth/death model which makes monthly adjustments to the number as
well as the possibility that public sector hiring may have increased in
April and therefore mitigated some of the negative effects of the
recent spate of private sectors layoff announcements.
Our best guess is that the number today will likely print better than
â€“100k loss and we base that assumption mainly on the improvement in the
four week jobless claims average. Nevertheless, the possibility of a
surprise either way appears to be quite strong today and the post news
reaction may be typically volatile. Therefore as always we prefer to
stand down ahead of the number.
In other economic news Australian Retail Sales printed better than
forecast rising 0.5% vs. 0.3% expected indicating that the economy Down
Under continues to grow at a healthy pace. If the bulls are indeed
correct that the worst of the credit crunch crisis is behind us and
global economy will continue to expand at 3% pace or better, Australia
becomes the strongest beneficiary of such an outcome piggybacking on
Chinaâ€™s voracious growth.
While RBA may have ended its rate hike cycle for now, it is unlikely to
begin easing if economic conditions in Australia maintain their current
levels. If RBA stands still, the Aussie with its 7.25% yield will
remain a magnet for global investment flows and AUDUSD could hit parity
if global risk environment remains benign.
Is The Euro Headed Below 1.500? Join us in EURUSD Forum
To discuss this article please contact Boris Schlossberg, Senior Curency Strategist: firstname.lastname@example.org
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