Softer Dollar Ahead of Non-Farm Payrolls

The dollar moved lower in yesterdays trade. We saw less dovish ECB minutes which confirmed Draghi’s comments of last week that the ECB will be looking to reduce the rate of bond purchasing. The ECB launched this program to stave off the threat of deflation in 2015 which is now a very low risk to the Eurozone economy. The release of these meeting minutes lifted the Euro to just below the current trend-line resistance level of 1.1425 which it has now paused as traders square up for tonight’s Non-Farm Payrolls. This provides the chance for exaggerated moves in the Dollar on a surprise beat or miss this evening. We have already had a weak ADP Non-Farm Employment Change of 158k vs 184k expected, which is normally a precursor to the main event.

Looking ahead, we are expecting quiet range bound trading as traders wait on the sidelines for tonight’s NFP figures. The market is expecting a read of 175k. Anything above or below this figure by 20k would give us enough conviction to open new positions. The Fed are in desperate need of some numbers to go their way to be able to justify further rate hikes this year. There is only so long that they can ‘read through’ important data releases, and commentators are lining up thick and fast to join the Dollar bear camp.

For those traders with interest in the Loonie be aware that the Canadian employment figures are out at the same time which can lead to the ‘perfect storm’ or a lot of confusion…..

On a side note, the G20 meeting is being held in Germany over the weekend. The main agenda is climate change so we aren’t expecting many market moving headlines for Mondays open, however this is the first showdown for Trump and Putin, with a seriously large elephant in the room (the election scandal) so anything could happen.

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