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Euro and High Yielding Currencies Remain Firm but Trading to be Subdued ahead of NFP
The single currency maintained a firm undertone, trading around 1.4340-50 in Asia after rebounding from 1.4220 yesterday as European Central Bank hiked rates and showed concerns over inflation. ECB raised rate by 25 basis points yesterday, though is widely expected, as the central bank has decided to suspend rating threshold for Portugal and offered to provide liquidity to the country regardless of its rating, euro rebounded versus the greenback, Japanese yen as well as the British pound. Despite skipping the wordings of 'strong vigilance', as ECB President Trichet expressed that they are still monitoring inflation closely and he does see risk on the upside, suggesting there are still room for further rate hike in 2011. We heard U.S. banks and funds are offering at 1.4380-1.4400 and more selling interest is located at 1.4425, one the downside, bids are reported at 1.4300 with stops placed below 1.4280 with a option expires today at 1.4275 and 1.4340.
The greenback also kept its strength against other major currencies except euro as yesterday's release of ADP private job data surprised markets which caused speculation the non-farm payrolls data to be released today will bring a stronger number as well. USD/JPY hit a 5-week high of 81.42 yesterday and there are talks of $700 mil option expiry at 81.30 NY cut, mixture of offers and stops remains at 81.50 with more stops reported at 81.60, 81.80 and 82.00-10 whilst on the downside, bids from importers are lined up from 81.10 down to 80.80 with stops only emerging below 80.70 and 80.50 (sizeable).
Swissy also rebounded to 0.8495 yesterday after the release of stronger-than-expected ADP job data, however, the pair ran into heavy offers just ahead of previous resistance at 0.8508 and has retreated on profit-taking ahead of today's key release of U.S. job reports.
The British pound has remained under pressure below 1.6000 today mainly due to cross-selling especially against the single currency and some Asian currencies, hitting a over one week low of 1.5938 and some bids are tipped at 1.5910-20 but traders are targeting a break of 1.5900 and 1.5850 option (to be expired today NY cut).
One major focus today is the release of June U.S. job reports, non-farm payrolls (NFP) at 12:30GMT with market consensus at 89K (previously 54K) and unemployment rate at 9.1% (previously 9.1%) subdue trading is expected ahead of the release and traders are tend to bet of a possible surprise of a stronger data (some analysts raised there expectation to 100K-150K).
Another key focus is the raise of U.S. deficit ceiling, U.S. President Barack Obama and the Republican leader in the House of Representatives, John Boehner indicated that they were ready to make compromises to avoid fiscal crisis.
Elsewhere, high yielding currencies surged across the board, Lonnie jumped to a over 1-month high against the greenback to 0.9569 whilst kiwi rallied to 0.8333 today, approaching the post float high of 0.8344.
Market Overview | Written by ActionForex.com | Jul 08 11 06:42 GMT
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