Dollar Heads for Weekly Decline against Euro ahead of today’s Non Farm Payrolls Data

Currency Trading Summary

U.S. Dollar Trading (USD) headed for another weekly decline as growing fears regarding a US recession remain. Following Wednesday’s 50bp Rate cut, Interest Rate Futures on the Chicago Board of Trade now show a 72% percent chance the Fed will continue lowering its target rate by at least another half-percentage point to 2.5 percent on March 18. In U.S. share markets the Dow Jones was higher by 207.53 points (+1.67%) whilst the NASDAQ closed lower by -10.75 points (-0.58%). Crude oil fell by US$0.85 a barrel to US$90.90. Looking ahead, Non Farm Payrolls, Unemployment Rate and Construction Spending are the key pieces of data today.  

The Euro (EUR) remained near yesterday’s two week high versus the dollar following a surprise pick-up in Eurozone inflation to 3.2 percent, strengthening the ECB’s case for resisting interest rate cuts even as the region’s growth slows. Overall the EURUSD traded with a low of 1.4804 and a high 1.4913 before closing the night 1.4863 in the New York session. Manufacturing PMI is the Eurozone’s only piece of data due for release today.  

The Japanese Yen (JPY) was buoyed by views that the carry trade is a thing of the past, with reports suggesting that investors should revert from using the Japanese Yen to fund high yielding currencies. The yen has been the best-performing major currency this year, gaining 4 percent against the Dollar and 2.7 percent versus the Euro. Overall the USDJPY traded with a low of 105.73 and a high of 106.87 before closing the day at 106.26 in the New York session.

The Sterling (GBP) gained ground mainly from the Gfk consumer confidence data which came out to be slightly better than forecasted, giving further boost to the rally in the pound that started at the end of last week. On the data front, Nationwide House Prices fell 0.1 percent in January, taking the annual rate of increase down to 4.2 percent; it’s lowest in 2 years. Overall the GBPUSD traded with a low of 1.9835 and a high of 1.9944 before closing the day at 1.9904 in the New York session.

The Australian Dollar (AUD) continued its rally on the back of the Fed rate cut, as the RBA is expected to hike 25 bps next week, further widening the gap between the two currencies. Overall the AUDUSD traded with a low of 0.8848 and a high of 0.8981 before closing the day at 0.8956 in the New York session.

Gold (XAU) traded in a range of $10 between a low of 918.80 and 928.40 in late London trading, however was unable to break records reached on Monday.
 

TECHNICAL COMMENTARY