USD – The dollar consolidated within its recent ranges overnight with no new major developments in the ongoing fiscal debate or the European debt crisis.  The relative calm is translating into little movement in financial markets with stocks and commodities largely unchanged.  Investors received decently supportive data this morning, but all eyes remain on this Friday’s nonfarm payrolls and unemployment reports. Private payrolls provider ADP announced that 118K private sector jobs were created last month, far from the 157K in the previous reading, but only slightly worse than the expected drop to 125K.  However, data is likely heavily skewed by weather-related disturbances after Hurricane Sandy snarled the East Coast to a virtual standstill for nearly a week in November.  Elsewhere, factory orders rose by 0.8% versus an expected flat reading.  While the gauge is down from the previous month’s 4.5%, the better-than-forecast results are encouraging for the otherwise struggling manufacturing sector.  Finally, ISM non-manufacturing gained to 54.7 from 54.2 in the previous reading, and came in far better than the expected decline to 53.5.  With the holiday shopping season about to hit high gear, the unexpected pickup suggests the economy may fare better than previously expected in the fourth quarter.  Nevertheless, with no new apparent impetus for holding dollars as a “safe-haven,” expect the greenback to remain range-bound in the near term as investors await Friday’s jobs numbers. 

EUR – The euro pulled back from recent highs overnight, but remains well entrenched within its ranges against its major counterparts.  Direction has largely been provided by technical indicators after the relative strength index suggested yesterday’s late-day move to an eight-week high was overdone.  With little data out to provide guidance and with Eurozone leaders locked behind closed doors in Brussels, investors will be paying close attention to Ireland’s 2013 budget data due later this morning.  Despite recent positive economic news out of the island nation, the government’s finances remain a cause for concern with the budget deficit as a percent of GDP expected at 8.2% - the highest in the Eurozone. Terms of Ireland’s EU/ECB/IMF bailout state that the number must be reduced to 3.0% by 2015, a daunting task after two years of little progress. 

GBP – Sterling traded in a rather narrow range overnight against both the USD and EUR despite a worsening outlook for the British economy. Chancellor of the Exchequer George Osborne today downgraded the government’s outlook for economic growth and extended the timeline for getting the nation’s budget deficit under control.  Osborne’s report showed that the UK economy will contract 0.1% in 2013 versus a 0.8% gain that was forecast back in March.  Nevertheless, investors expect little change from the BoE at their meeting tomorrow with policymakers clearly growing weary of quantitative easing and ultra-low interest rates.  Consequently, the pound will remain well supported in the near term, albeit within its recent relatively narrow ranges.

JPY – The yen fell back towards a seven-month low overnight, reversing two straight days of gains after BoJ Deputy Governor Nishimura said that policymakers were “ready for action” when needed.  Technical studies suggest the yen will likely find support near the key 83 handle vs. the dollar, and then again at the yearly lows near 84.

Commodity Currencies – The commodity linked currencies are virtually flat this morning as risk sentiment remains neutral.  The CAD is well supported a day after BoC policymakers maintained their bias to raise interest rates in the coming months.  Similarly, the MXN remains towards the top of its ranges as volatility drops to a near historic low on high expectations for the support incoming President Pena Nieto will provide for the emerging economy.  The AUD is lower after GDP data showed that the Australian economy slowed last month and RBA policymakers expressed their unease with the relatively strong currency.

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