Friday August 6, 2004 - 09:38:49 GMT
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INVESTICA Ltd - www.investica.co.uk
Waiting for payroll data
Trade will be very subdued ahead of the US payroll report as the data will set the market tone for the next week. The dollar is likely to need payroll growth of at least 250,000 to make significant progress while a figure below 180,000 could push the dollar down to at least 1.2150. Volatility is likely to be high after the report, especially with low liquidity. From a medium-term view, the dollar still offers little value stronger than 1.20 even if it pushes through this level today.
The weakened to 1.2085 in New York and was at 1.2060 in early Europe on Friday. The dollar was unsettled by the sharp decline on Wall Street and there were also concerns over oil prices. The impact of high energy prices should still be mixed for the dollar, but will tend to be negative if Wall Street continues to decline.
The jobless claims figures were better than expected with a decline to 336,000 in the latest week from 347,000 previously. This has boosted hopes of a stronger employment report today, but there is still major uncertainty. Market forecasts are centred on a monthly increase of around 230,000. The dollar is likely to need a figure of at least 250,000 to strengthen through 1.2020. A figure below 180,000 would hurt the dollar and a figure below 150,000 would be likely to trigger a decline to at least 1.22. Revisions to the previous figures will also be important to assess whether the weak June figure was a true reflection of the economy or whether it is revised up strongly.
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