It’s all about payrolls

Data/Event Risks

  • USD: Out at 12:30 is the quarterly Employment Cost Index, followed by various regional ISM surveys. Weakness in the latter may presage a soft national ISM outcome, due out on Thursday, which may provide the dollar with some assistance. Plenty of labour market data on Thursday/Friday, including ADP, jobless claims and (most critically) payrolls.
  • EUR: A light calendar, with IT and EU CPI out later. Europe’s finance ministers discuss progress on Greece in a conference call. Discussions between the troika and the Greek coalition have concluded.

Idea of the Day

With the forex market awaiting important labour market data out of the US tomorrow and Friday, the major driver today will be month-end flows triggered by portfolio rebalancing. At the margin, these are likely to be dollar-positive, and euro and cable-negative.

Latest FX News

  • USD: With Wall Street still closed, and the BoJ prepared to inject yet another dosage of monetary medicine, the dollar was down very slightly yesterday. Yet again, the dollar index has struggled to stay above the 80.0 level for very long. Month-end flows may help today.  
  • EUR: The bears tried to push the single currency below 1.29 on numerous occasions yesterday, but each time were met by a wall of buyers. Eventually, the sellers gave up, and turned bullish, resulting in a gradual climb to above 1.2950. For now, the euro remains in a very tight range.
  • JPY: The economy is in worse shape than expected and the BoJ has again resorted to asset purchases, but suddenly the yen looks bid again. Short term, go with the flow – the yen looks biased to the topside.
  • AUD: The Aussie has had a few attempts at getting down to the 1.03 level in recent days, but to no avail. For now, it seems to be tough to short the AUD.

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