v US ADP employment data was up, suggesting positive outlook for Friday's Non-Farm Payroll;
v EUR remains flat as risk is building for tomorrow's PSI announcement and ECB meeting;
v Commodity Currencies saw slight gains against the USD, however risk appetite is limited ahead of rate meetings with several central banks.
The USD remained relatively flat against most majors this morning as the market anticipates the results of Greek bond swap tomorrow and US non -farm payroll on Friday. The only significant news out in the US today is the ADP employment release, which indicated that 216k jobs were added in February, well in line with the expected 215k. Although ADP has not been very accurate in tracking the absolute amount of non-farm payrolls, especially having overstated job gains in the past six reports, it is still a good directional indicator of NFP. However, the recent decline in ISM manufacturing can point to weaker job growth. Consequently, we do not expect any surprised uptick in NFP, but a continued modest recovery in the labor market is expected, supporting the USD in the near-term.
The EUR remained at yesterdays levels against the US dollar, ranging around 1.3100-1.3170 as the market is on hold ahead of Thursday's Greek bond swap results. By tomorrow, Greece needs to receive 75% agreement to submit to the conditions of PSI, which will allow them to implement CAC and achieve broad based support. However, if less than 75% of bond holders accept the swap, then CACs will mostly likely be activated which will be very negative for the EUR in the near-term. Domestically, German factory orders declined in January falling to -2.7% vs. the previous gain of 1.7% and 0.60% eyed. With the Greek PSI agreement, ECB decision and press conference all scheduled for tomorrow, the market will likely remain quiet until then.
The GBP is flat against the USD this morning as the market awaits tomorrow's interest rate decision from the BoE's Monetary Policy Committee and Greek's bond swap results. The UK's five year government notes slipped as the nation sold 4 billion pounds of securities maturing in September 2017. Benchmark interest rate and bond buying target is expected to be unchanged at 0.50% and 325 billion respectively. With Europe's equities advancing, the sterling will likely be supported by modest risk appetite today.
The Japanese yen halted from a rally seen earlier this week after the release of encouraging US jobs data. The focus will be on the release of Japan's GDP and trade figures later in the day. A growing concern is the deterioration of exports and the added pressure it will bring to the BoJ. Investors expect the yen to weaken going into the weekend.
Commodity Currencies are gaining slightly against the USD as investors grow more confident after todays better than expected US jobs data. However, the market remains cautious ahead of a slew of central bank meetings tomorrow where the BoC, ECB and BoE are scheduled to announce rates. The CAD was little changed as better US data countered the markets looming concern over the unresolved outcome on Greek debt restructuring deal. In addition, the AUD is stronger, despite the release of lower-than-expected GDP of 0.4% growth, half of the expected 0.8%. Gains from commodity currencies have met early resistance levels as investors remain cautious on this week's global economic data releases.
CHANGE FROM CLOSE
10-Year Treasury Yield:
This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends.