MORNING BRIEFING: Expectations for US Jobs report dominates market sentiment today

[RTFX-Trading]

MORNING BRIEFING:  Expectations for US Jobs report dominates market sentiment today

What’s new:
Euro: Euro driven lower ahead of Nonfarm payrolls release today
US Dollar: Dollar gains support as bears sell-off Euros worried Nonfarm payrolls expectations too high
G20: Meetings start today ahead of the summit
Japan: Naoto Kan chosen to become Japan’s next premier
Swiss Franc: will SNB be resorting to intervention?

Today:



Rates in Asia and Indices:
EURUSD: 1.2190 - 1.2156.
USDCHF: 1.1570 - 1.1532.
GBPUSD: 1.4645 - 1.4606.
EURJPY: 113.12 – 112.53.
USDJPY: 92.86 – 92.52.
DowJones: 10'255.28 +0.06%
NASDAQ: 2'303.03 +0.96%
S & P 500: 1'102.83 +0.41%
Nikkei: 9’904.10 -0.10%
Shanghai: 2’550.08 -0.10%
Gold: $ 1,205.40
Crude Oil: $ 75.03

 
Comments:

Yesterday the bears pushed Euro lower as it suffered from renewed selling pressure, the 1.2150 support came under focus again despite last Tuesday’s breach of this level (with lows of around 1.2110) – by and large the 1.2150 level seems to have held. Support around this area has managed to hold since 19th May.  The sell off was mainly triggered by worries that expectations for nonfarm payrolls might have been set too high.

SNB chairman Hilderbrand is scheduled to speak today at 07:40GMT, interesting to note his comments on possible Forex intervention policy – if SNB decides to intervene (given lows with euro) hence pushing Euro up, it might have same effect on the EURUSD pair.

Dollar started its rise yesterday on the back of the Nonfarm payrolls data release expected today – markets are building large expectations for these figures, and they will ease worries about the global recovery if they at least match forecasts. If this happens, risk appetite will rise and this should favour demand for riskier assets. Within this scenario a recovery can be expected for EURUSD, RTFX Tradertip expects a recovery back to the 1.2245/1.2275 region. Given we are still bearish for the medium to longer term we have to accept the possibility of EURUSD falling to 1.2110. We will see how data and markets develop.

In Japan, Finance minister Naoto Kan was chosen to become Japan’s Next prime minister.

G20 nations shall be meeting today and over the weekend in Busan, South Korea to endorse European plans to tackle the euro zone debt crisis. They are also expected to discuss ways of structuring financial markets rules in a more Homogeneous manner.


Good day,


Rudolf Muscat
Trading desk

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