Friday May 4, 2007 - 10:26:33 GMT
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INVESTICA Ltd - www.investica.co.uk
Payroll data key for dollar
The Euro will remain vulnerable to a further correction weaker unless the US employment data is well below the 100,000 level.
The dollar found support close to 1.3620 against the Euro on Thursday and strengthened to highs around 1.3550 in New York following the US economic data. The dollar retained a firmer tone in early Europe on Friday and was unable to strengthen back above 1.3580 with a move back to 1.3550.
The US ISM services-sector index strengthened to 56.0 in April from 52.4 the previous month, the highest reading since January. The orders component strengthened and the prices index also rose slightly over the month. The employment index at 51.9 indicated moderate employment growth, similar to the pace seen over the past few months. Elsewhere, jobless claims fell to 305,000 in the latest week, the lowest reading for four months, which suggests a firm labour market.
The Friday labour-market data will inevitably dominate near-term market sentiment. The US currency will be in a position to extend the recent recovery if there is stronger than expected data, especially if there is a payroll increase of above 150,000 for the month. Revisions to previous data will also be watched closely after consistent moves to upgrade previous data over the past few months.
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