The sentiment remains the dominant factor in the FOREX market, with eyes shifting from Bin Laden to rate decisions and the infamous jobs report.
We saw a new wave of expectations fuel the market today with fears rising once again in Asia over more tightening moves from China which weighed on commodities and equities. The dollar remained mixed ahead of the ADP report today which will be the first concrete block for speculating the overall jobs growth status in the United States.
Haven demand bolstered the dollar since the start of the week helping the dollar index off its lowest in three years. Today, the dollar index is hovering mostly around the same tight range around opening levels currently around 73.04 recording the high of 73.29 and the low of 72.94.
The market shifted the focus gradually towards the data on queue for release, somehow offsetting the effect Bin Laden had on the market! The focus on monetary tightening surely did the euro good and was the main pressure on the dollar to remain stable.
Following disappointing retail sales and services figures from the euro area, the common currency found support from Portugal's reached bailout deal that started to ease woes over possible fiscal problems and whether it was going to prevent the ECB from acting on inflation.
Portugal reached agreement on 78 billion euro three-year loan package where the nation should slash the deficit from 9.1% of the GDP to 5.9% this year and to 3.0% by 2013.
The news eased the fears and shifter the focus on the ECB as investors look for hawkish comments from the ECP President tomorrow. The EUR/USD is trading around 1.4853 recording the high of 1.4878 and the low of 1.4773.
Sterling rebounded sharply on technical moves after the pair was pressured higher to correct the sharp decline yesterday. The move is surely not on sterling strength as the data from UK were also abysmal with the drop in house prices and slowing construction activity and lending.
Sterling rebounded from support areas around 1.6450 to the high of 1.6542 and the SMA 50 is still preventing the pair from moving further to the upside as the downside pressures remain and the volatility is expected with the BoE decision tomorrow, though the bank will not provide anything new for the market with the prevailing four-way split!
We might see heavy movements in the US session with the ADP report and the ISM services as the speculation begins for Friday's jobs report that true indentifies the status of the US economic recovery and whether indeed the global recovery is losing momentum.