Friday July 2, 2004 - 09:39:38 GMT
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INVESTICA Ltd - www.investica.co.uk
Euro needs US payroll growth below 200,000
The US employment report will dominate today, although there is a high risk that the data will fail to trigger a breakout, especially ahead of the long US weekend. There is also likely to be a closing of long Euro speculative positions which could offer some dollar support. The underlying risks look to be for a gradual dollar retreat, but a payroll figure below 200,000 will be needed to push the Euro above 1.2250.
The dollar was unable to secure a break from existing ranges on Thursday with the Fed interest rate decision not providing substantial fresh trading incentives. The Euro was unable to push above 1.22 and had retreated to 1.2150 in early Europe on Friday.
The US data failed to offer direction, with jobless claims edging higher to 351,000 from 350,000 while the June ISM manufacturing index dipped to 61.1 from 62.8. There was, however, some relief that the index did not register a sharper decline.
The employment data today will dominate trading with market expectations centred on an increase of around 240,000. A figure above 300,000 would be likely to trigger a solid dollar rally on expectations of a 0.5% Fed rate hike in August while the US currency will be vulnerable if there is a figure below 200,000. The recent jobless claims figures suggest there may be a slight downside risk for the headline figure.
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