Euro is on the defensive hours before Non-Farm Payrolls

  • Euro plummeted on Thursday after ECB President Jean-Claude Trichet disappointed investors by saying that there is no urgent need for a rate hike any time soon. The euro which has already priced the possibility of higher interest rates, stepped off the 1.38 level falling as low as 1.3609 from 1.3824. 
  • The dollar appeared stronger against a basket of currencies helped by encouraging US data on Thursday. Fed Chairman Ben Bernanke said in a speech that evidence shows the economy is improving but still the US economy requires help from the central bank. Eyes turn on US Non-Farm Payrolls due later today and investors expect figures to show an increase of 145K that can push the dollar higher.
  • The Australian dollar edged higher supported by the central bank's positive comments on the country's economic outlook. The Reserve Bank of Australia predicts a strong growth in the following years despite the massive floods that recently hit the country. Demand for the Aussie is rising as expectations of RBA lifting the rates in the near future are high. The Aussie climbed to a one month high at 1.0193 against the dollar from 1.0054. After expectations of a rate hike in Europe faded, the Aussie now has a rate advantage over the euro. EUR/AUD shed more than 2% sliding as low as 1.3364.  
  • Sterling rose on Thursday helped by upbeat Purchasing Manager Index services data. The data confirms that the UK economy is recovering and reinforces the view of the Bank of England raising rates later in the year. Against the dollar, the sterling rose to 1.6276 but then surrendered its gains weighed by the euro's fall and a stronger dollar. The pair was last traded at 1.6142.
  • Gold rallied on Thursday helped by rising tensions in Egypt that spurred an increased demand for safe haven bets. The precious metal rose as high as 1388.50 dollars an ounce from 1324.95. Today, gold trades slightly lower around 1350 dollars an ounce ahead of the US Non-Farm Payrolls which is expected to show a significant improvement in the employment sector.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3700 with a preference to enter into Short positions at 1.3690
  • § The USDJPY pivot point is at 81.90 with a preference to enter Short positions at 81.85              

Today's calendar and market movers:

  • § US Non-Farm Payrolls is forecasted to rise to 121K
  • § US Unemployment Rate in January is forecasted to gain 9.5%
  • § Canada Unemployment Rate in January is forecasted to remain unchanged at 7.6%

Equity Markets:

US equities were positive on Thursday with the S&P500 trading up 0.24% and the DJIA trading up 0.17%. The European bourses are mixed with the FTSE trading down -0.28%, the DAX trading up 0.14% and the CAC down -0.74%. The NIKKEI and the HSI at the time of writing are trading up 1.08% and up 1.81% respectively. 

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