Daily Forex Overview

Previous session overview

On Friday, the dollar advanced sharply against several key rivals after the U.S. Labor Department reported that the April unemployment rate fell to 5.0% and 20,000 jobs were lost, far fewer than expected.

Last week, there have been a number of upside surprises in the US releases including non-farm payrolls report, first quarter GDP, Chicago PMI, and manufacturing ISM. This is the first time in 4 months that the non-farm payrolls report beat expectations, falling by -20k instead of the forecasted drop of -75k.

The euro declined by more than a full U.S. cent to USD1.5360, its lowest level in more than a month. The Euro continued its fall against the dollar posting 6 week lows after the release of better-than-expected employment figures out of the U.S. Also releasing out of Germany was retail sales figures, which came in below forecast at -.01 percent month/month and -6.3% year/year, while, PMI manufacturing came in 0.1 percent below the consensus for a reading of 50.7. EURUSD traded with a low of 1.5361 and a high of 1.5498 before closing the day at 1.5416 in the New York session.

The Sterling weakened against the dollar, although managed to touch a five-week high against the Euro as weak UK housing data was largely ignored. GBPUSD traded with a low of 1.9707 and a high of 1.9897 before closing the day at 1.9739 in the New York session.

The Japanese yen remained under pressure as the dollar pushed the currency pair above 105. USDJPY traded with a low of 104.36 and a high of 105.70 before closing the day at 105.25 in the New York session.

AUDUSD jumps above 0.9400 in late Asian trade on offshore interest amid thin liquidity with Japanese markets closed.

The Canadian dollar fell against the greenback after the strong employment report released out of the U.S.

Market expectation

The recent rise in EURCHF seems hard to justify for fundamental reasons. The upward trend comes on the back of a higher USDCHF, which in turn was lifted by Friday's US payroll data.

Traders noted that the biggest test now for the dollar is a technical euro level around USD1.5340. If the euro breaks below that, the dollar could be headed for even more significant gains. Otherwise, the dollar is at risk of dipping again.

This week, both Bank of England and European Central Bank will meet to decide on interest rates. Both are expected to keep rates unchanged.

Services ISM for the month of April is expected to be seen at 49 down from the previous 49.6.

Japanese markets will be closed on Monday and also UK markets will be closed on Monday due to Bank Holiday.

Most important events of the day