Friday July 8, 2005 - 11:00:46 GMT
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Dollar Awaits The NFP’ s
Dollar Awaits The NFP’ s
USD/JPY once again hit yearly highs in Asian trade today reaching the 112.40 level as Machine Orders slipped -6.7% vs. -2.0% expected. Orders were weighed down by a plunge in manufacturers' orders which declined -20.6% month over month. The sharp drop may have been an adjustment to the rapid rises in the prior three months, but the market did not care, pushing the yen to new lows even though other economic data such as Household Spending was positive, increasing 0.8% vs. 0.2% projected on a m/m basis. The yen continues to trade in tandem with oil and until crude recedes the market will continue to look for the bad and ignore the good economic data.
The euro meantime is treading water as the market squares up for the NFP. The unit lost all of its post London bombing gains, but appears to be holding the 1.1900 figure. With the exception of yesterday’s spike the pair has traded 1.1900-1.1950 range since Monday wrapping itself in a volatility coil that may be ready to burst either way.
As for the NFP’ s, consensus now expects a gangbuster print of 200K after strong manufacturing and non-manufacturing ISM results. The Deutsche Bank/ Goldman Sachs derivatives auction priced the expectation at 194K while IFR is looking for lower number of 165K. It will be interesting to see if dollar bulls can generate enough momentum to take out the 1.1800 figure should the NFP prove positive. With the dollar rally quite overextended, each new positive surprise will have to pack more punch in order to move price further in the same direction.
FX Spot Overnight
- EUR hovers at 1900 awaiting NFP
- JPY hits new lows at 112.40 as Machine Tools decline sharply
- GBP at 7350 on new lows as geo-political events add to economic worry
- CHF above 1.3000 once again
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