The dollar recovered slightly at the start of the week, pushing the euro below the 1.50-level. Markets remain jittery as traders return to their desks following the Thanksgiving holiday and continue to closely scrutinize the potential fallout from Dubai. The Asian equity bourses rebounded overnight while the US indexes drifted lower, with the Dow Jones and S&P 500 slipping by 0.3% in the early afternoon session.
The economic reports released this morning included the New York ISM survey and the November Chicago PMI index. The NY ISM manufacturing survey improved to 384.4 in November compared with 377.9 in October. Meanwhile, the Chicago PMI report surprised to the upside, jumping to a 15-month high and sharply beating consensus estimates for a decline to 53.7, instead climbing to 56.1 in November from 54.2 a month earlier. The PMI employment component edged up to 41.9 from 38.3 while the new orders index improved to 62.8 compared with 61.4 in the previous month.
The week ahead will see several key data releases from the US, consisting of November manufacturing ISM, pending home sales, ADP private sector payrolls, Q3 productivity, and the November jobs data. The unemployment rate is expected to remain unchanged at a 26-year high at 10.2% while non-farm payrolls are seen improving to a reading of 140k jobs lost versus 190k jobs lost from October.
Euro drifts lower
The euro eased off its earlier session highs at 1.5082 to slip below the 1.50-handle to 1.4953. The key highlight this week will be the ECB monetary policy meeting on Thursday. While the ECB is expected to leave interest rates unchanged at 1.0%, traders will focus closely on the subsequent press conference by Bank President Trichet for his outlook on the economy and the prospects for tightening of monetary policy over the coming months.
EURUSD trades just beneath the 1.50-level with support starting at 1.4960, followed by 1.4930 and 1.49. Subsequent floors are eyed at 1.4870, backed by 1.4840 and 1.48. Gains will target interim resistance at 1.5025, followed by 1.5080 and 1.51. Additional ceilings are seen at 1.5130, backed by 1.5165 and 1.52.