“The question remains whether this is merely profit-taking/ scaling down of positions before tonight’s non-farm payrolls or the start of a more longer dollar bounce….”
Andrew Timothy Robinson
ECB’s Trichet had warned about excessive FX volatility while two FED members, Fisher and Hoenig, broke from the more recent dovish talk on QE II. The question remains whether this is merely profit-taking/ scaling down of positions before tonight’s non-farm payrolls or the start of a more longer dollar bounce….
The Bank of England stood pat on its QE target and, with the market overly committed to a second phase of QE, the pound rallied back above the key 1.60 level, albeit temporarily.
ECB also kept up its recent rhetoric about rates being appropriate, even if they are slightly accommodative, with inflation risks tilted slightly to the upside, growth outlook slightly to the downside.
As a result EUR pushed up to the 1.40 handle, taking out reported options barriers in the process.
After the strong jobs data, AUD crawled up to a record high of 0.9916 (is that close enough to parity for everyone?) before retreating as the dollar rebounded.
The BoJ gave the green light to those looking to push USDJPY to new lows as it commented that it would not look to weaken the JPY as a tool aimed at increasing Japanese competitiveness, but would only do so to stem “excessive” moves in the market. mere placatory comments ahead of the IMF/G7 meeting?
As a result USDJPY eased off to new 15-year lows.
On the data front, initial jobless claims were slightly better than expected, 445k versus 455k and an improvement from last week’s 456k though continuing claims edged higher to 4462k from 4457 last week.
Wall Street sagged as commodities eased off with the dollar’s rebound.
Not so much to excite Asia today with all eyes focused on the US non-farm payroll and unemployment report tonight and the IMF/G7 finance ministers’ meeting in Washington.
China markets re-opened after a one week break and the PBOC fixed the USDCNY rate at 6.6830 (a new low and some 0.27% lower than the previous fix, though note the USD index has fallen 1.6% in that period).
Japan’s Finance Minister Noda was on the wires again, commenting on the JPY’s gains and reminding markets that firm measures will be taken on excessive currency movements, including intervention, when necessary.
He also sought to justify the Sep. 15 intervention by saying it was intended to stop such moves and not intended to be on a big scale nor with a specific target level in mind. He added that competitive currency devaluation would be bad for the global economy- placatory words indeed ahead of today’s meeting.
We might have had a flurry in risk appetite when Moody’s announced Friday mid-morning that it was putting China’s ratings on review for a possible upgrade, but sadly the reaction in currency markets was muted.
For the rest of the day, Europe sees Swiss unemployment, German trade data, Swedish industrial production and UK PPI.
Prior to the US payroll data, we have Canada’s unemployment and housing starts while the BoC’s business outlook survey follows afterwards.
US wholesale inventories complete the data for today.
Have a great weekend!
By Andrew Timothy Robinson
TO WATCH – UPCOMING WEEK
(All Times GMT)
- GE Trade Data (0600)
- Sweden Industrial Production (0730)
- UK PPI Input/Output (0830)
- CA Employment Change/Unemployment Rate (1100)
- US Change in Non-farm Payrolls (1230)
- US Unemployment Rate (1230)
- US Avg. Earnings (1230)
- US Wholesale Inventories (1400)
- CA BoC Business Outlook (1430)
Select Your Language:
- FOREX-Dollar rises on Bullard remarks; payrolls awaited (reuters.com)
- FOREX-Dollar wobbles near lows ahead of jobs data, G7 (reuters.com)
- Saxo Bank Quarterly Outlook Q4 2010: Western Economies Facing a New Cold Front (prnewswire.com)
- William Watts’s Forex Files: QE fears, dollar dumping makes for mighty euro (marketwatch.com)