IFR Forex Watch SQUAWK BOX
03:00GMT: USD: US Non-Farm Payrolls Key To Short-Term Direction
Analysts feel that the release of US non-farm payrolls later today will take on greater significance than usual for the financial markets. The US payroll data is always a catalyst for immediate-term movements on the dollar, but this one just might determine the trend for the short-term at least. The Fed Minutes released on Tuesday stated clearly that future Fed action will depend on upcoming data. Analysts point out that the "hawkish" members of the FOMC are still concerned about conditions in the labor market leading to future inflationary pressures. The FX market sold the US dollar after the Fed Minutes due to the perception that the end of the tightening cycle is nigh, but if tonight"s data is better than expected it could shift perceptions towards the possibility that the Fed might hike 25 bps at the next two meetings at least rather than pausing after hiking once more when they meet in February. Such a change in perception could result in the USD gaining back a lot of the ground lost since the Fed Minutes this past Tuesday. Conversely, a weaker than expected job number could see US dollar weakness accelerate in the coming weeks.
The consensus forecast is for a rise of 215 K with the range of forecasts between 180K and 300K. We feel that a number around 250 k will see the USD correct higher (i.e. EUR/USD move back to 1.1980). A result around 300K or better could see the EUR/USD track back to 1.1800/50. On the other hand, if the payroll number comes in between 150/180 K we could see the EUR/USD head towards the 200-day MA around 1.2225 while a number significantly worse might see the EUR/USD start to make tracks towards the September highs above 1.2500.
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04:25 GMT January 6 GBP/USD OUTLOOK
Cable opened in Asia at 1.7558 and we have seen a 1.7527- 73 range in subdued trading. EUR/GBP has traded .6891-.6900 after opening at .6895. Having opened at a level where we spent most of the previous day, sterling traders were unable to get over enthusiastic and with little in the way of news, both pairs have drifted rather aimlessly all day. Traders' attention is focused firmly on the US data due out tonight. IFR Markets are anticipating a number slightly lower than street forecasts, at 190k as opposed to 215k on the street. If the number comes in lower at 180k or less, it should be enough to break through offers at 1.7615 and target the next technical level at 1.7680.
Any number over 225k will likely see cable long positions running for cover and stops around 1.7460 getting triggered. Order books are said to be relatively bare in GBP/USD with stops still in place in the EUR/GBP at .6915. There was talk yesterday that these stops were significant in size, yet the market traded to within 5 pips and still couldn't trigger them. [email protected]
05:16 GMT Jan 6 EUR/USD OUTLOOK
The EUR/USD opened in Asia around 1.2110 after a very quiet US session. There was talk in early Asia of sovereign names on both sides of the market. Asian central banks were rumoured to be bidding 1.2070/80 while a quasi-central bank out of Europe was rumoured to be selling above 1.2110. Most expected a quiet session with the orders and US payroll data out later today, but that was not the case. Stops above 1.2120 were triggered to a high of 1.2127 and this was followed closely by a move lower to take out small stops below 1.2085 to a low of 1.2078. Once the stops were dealt with the EUR/USD settled between 1.2085/1.2095 for the balance of the session.
The short-term direction of the EUR/USD will be determined by US payroll data out later today. The market is looking for plus 215K and if it is significantly higher than that the EUR/USD will fall back through the 100-day MA at 1.2005. On the other hand, if it is significantly weaker than what is expected the EUR/USD should head for the 200-day MA around 1.2220. There is talk of a 1.2150 option barrier that might create headwind on aggressive attempts higher. (JN)
05:30 GMT January 6 USD/JPY OUTLOOK
The USD/JPY opened in Asia around 115.90 after easing during the US session on EUR/JPY selling flows and strong moves higher in Asian currencies. The USD/JPY pushed over 116.00 in early Tokyo on Japanese investor related buying before broad USD selling led by EUR/USD took the USD/JPY down to a low of 115.79. The USD suddenly reversed course and the USD/JPY surged up to 116.27 as a knee-jerk reaction to reports that Asian central banks were intervening to buy USD against their strengthening currencies. Talk of Japanese exporter offers between 116.40/50 discouraged further attempts higher. Once the whipsaw price action was finished the USD/JPY settled between 116.00/20 for the balance of the session.
Traders expect the USD/JPY to say within 115.50/116.50 ahead of the US payroll data out later today. There continues to be talk of large option related buying ahead of a 115.50 barrier while the exporter offers at 116.50 should continue to cap. Which side breaks will be determined by the US job data. A neutral number around 200K should see the above range prevail. (JN)
03:00GMT: USD: US Non-Farm Payrolls Key To Short-Term Direction
Analysts feel that the release of US non-farm payrolls later today will take on greater significance than usual for the financial markets. The US payroll data is always a catalyst for immediate-term movements on the dollar, but this one just might determine the trend for the short-term at least. The Fed Minutes released on Tuesday stated clearly that future Fed action will depend on upcoming data. Analysts point out that the "hawkish" members of the FOMC are still concerned about conditions in the labor market leading to future inflationary pressures. The FX market sold the US dollar after the Fed Minutes due to the perception that the end of the tightening cycle is nigh, but if tonight"s data is better than expected it could shift perceptions towards the possibility that the Fed might hike 25 bps at the next two meetings at least rather than pausing after hiking once more when they meet in February. Such a change in perception could result in the USD gaining back a lot of the ground lost since the Fed Minutes this past Tuesday. Conversely, a weaker than expected job number could see US dollar weakness accelerate in the coming weeks.
The consensus forecast is for a rise of 215 K with the range of forecasts between 180K and 300K. We feel that a number around 250 k will see the USD correct higher (i.e. EUR/USD move back to 1.1980). A result around 300K or better could see the EUR/USD track back to 1.1800/50. On the other hand, if the payroll number comes in between 150/180 K we could see the EUR/USD head towards the 200-day MA around 1.2225 while a number significantly worse might see the EUR/USD start to make tracks towards the September highs above 1.2500.
[email protected]
04:25 GMT January 6 GBP/USD OUTLOOK
Cable opened in Asia at 1.7558 and we have seen a 1.7527- 73 range in subdued trading. EUR/GBP has traded .6891-.6900 after opening at .6895. Having opened at a level where we spent most of the previous day, sterling traders were unable to get over enthusiastic and with little in the way of news, both pairs have drifted rather aimlessly all day. Traders' attention is focused firmly on the US data due out tonight. IFR Markets are anticipating a number slightly lower than street forecasts, at 190k as opposed to 215k on the street. If the number comes in lower at 180k or less, it should be enough to break through offers at 1.7615 and target the next technical level at 1.7680.
Any number over 225k will likely see cable long positions running for cover and stops around 1.7460 getting triggered. Order books are said to be relatively bare in GBP/USD with stops still in place in the EUR/GBP at .6915. There was talk yesterday that these stops were significant in size, yet the market traded to within 5 pips and still couldn't trigger them. [email protected]
05:16 GMT Jan 6 EUR/USD OUTLOOK
The EUR/USD opened in Asia around 1.2110 after a very quiet US session. There was talk in early Asia of sovereign names on both sides of the market. Asian central banks were rumoured to be bidding 1.2070/80 while a quasi-central bank out of Europe was rumoured to be selling above 1.2110. Most expected a quiet session with the orders and US payroll data out later today, but that was not the case. Stops above 1.2120 were triggered to a high of 1.2127 and this was followed closely by a move lower to take out small stops below 1.2085 to a low of 1.2078. Once the stops were dealt with the EUR/USD settled between 1.2085/1.2095 for the balance of the session.
The short-term direction of the EUR/USD will be determined by US payroll data out later today. The market is looking for plus 215K and if it is significantly higher than that the EUR/USD will fall back through the 100-day MA at 1.2005. On the other hand, if it is significantly weaker than what is expected the EUR/USD should head for the 200-day MA around 1.2220. There is talk of a 1.2150 option barrier that might create headwind on aggressive attempts higher. (JN)
05:30 GMT January 6 USD/JPY OUTLOOK
The USD/JPY opened in Asia around 115.90 after easing during the US session on EUR/JPY selling flows and strong moves higher in Asian currencies. The USD/JPY pushed over 116.00 in early Tokyo on Japanese investor related buying before broad USD selling led by EUR/USD took the USD/JPY down to a low of 115.79. The USD suddenly reversed course and the USD/JPY surged up to 116.27 as a knee-jerk reaction to reports that Asian central banks were intervening to buy USD against their strengthening currencies. Talk of Japanese exporter offers between 116.40/50 discouraged further attempts higher. Once the whipsaw price action was finished the USD/JPY settled between 116.00/20 for the balance of the session.
Traders expect the USD/JPY to say within 115.50/116.50 ahead of the US payroll data out later today. There continues to be talk of large option related buying ahead of a 115.50 barrier while the exporter offers at 116.50 should continue to cap. Which side breaks will be determined by the US job data. A neutral number around 200K should see the above range prevail. (JN)
