Forex News and Events:
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The Jan US employment report is released at 13:30 GMT. Similar to consensus (-540k) and previous (524k), expect -525k, with the jobless rate jumping to 7.5% from 7.2% (its monthly average rise has been 0.3pp the past three months). We expect a number in-line with consensus to be overlooked by the dollar. However, if we take heed to the seasonal factor we could see the number come in better than expected as fewer workers were hired in the run up to the end of year, hence less workers to lay off as a consequence – a better number would greatly bolster the dollar and push it higher.
The EURUSD traded a 1.2750 – 1.2900 range yesterday and today as the markets jitter before the major move inducing NFP’s. Initial Support for the Pair stands at 1.2750 (morning’s lows) and the start of the retracement move. The yen was sold off against the USD and other pairs as a bout of renewed short-term risk-seeking triggered stops, pushing USDJPY as high as 92.25. Since the beginning of the year, there have been several attempts at risk rallies that have also weighed on the yen, but none thus far have been sustained.
The Yen weakened greatly yesterday on renewed risk appetite and a general sentiment that the BoJ has been uncharacteristically proactive in bolstering its economy – pundits expect the U.S to come out of this global crisis before the economies that failed to tackle the monetary and fiscal shortcomings in a sufficiently concerted and confident manner – the EU for example.
