Daily Market Report
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there was little movement in foreign exchange markets
Fri, Feb 2 2007, 14:18 GMT
by Jason Schenker
Overnight, there was little movement in foreign exchange markets, as traders remain focused on today's U.S.employment release.
GBP is a shade stronger in the wake of UK Construction survey data, but otherwise markets have been quiet. In the wake of stronger GDP numbers and a statement by the Fed that seemed to imply they're on hold for some time, a number around or above the 150,000 jobs consensus expects is likely to have less of an impact than a below-consensus number. Although we are calling for above-consensus 185,000 net new jobs to have been created in January, the risks to the dollar's volatility are asymmetrically to the downside. In the wake of yesterday's below-50 ISM manufacturing survey figure, growth concerns cannot be fully assuaged in the marketplace. The ISM index is key leading indicator of growth, and a reading below 50 points to contraction in the manufacturing sector. Today, a weak employment number could reawaken fears of a rate cut.
Earlier this week, with Lacker no longer a voting member of the FOMC, the voting was unanimous to keep rates on hold (removing an upward bias reflected by voting) for the first time since the tightening cycle ceased. This means that even if the rhetoric of the minutes reflected inflation bias, the voting was clearly for a hold. If jobs were to weaken and ISM were to point towards further slowing growth and contraction, the dollar could get whacked as a Fed rate cut gets priced back into the market. This is what market participants will be watching for.
Factory orders and U of Michigan Confidence will also be released today, but expect them to have a lesser impact on FX trading than the employment number, especially factory orders, which is more backward looking.
Published on Fri, Feb 2 2007, 14:19 GMT
Archive
- Risk aversion was the main theme of yesterday's trading session
Published On Fri, Jul 3 2009, 12:25 GMT - The US dollar and the yen fell against most major currencies
Published On Thu, Jul 2 2009, 13:25 GMT - The US dollar strengthened against the euro and the pound yesterday
Published On Wed, Jul 1 2009, 12:25 GMT - Daily Market Report
Published On Tue, Jun 30 2009, 12:50 GMT - The Swiss franc ended the week lower against the euro
Published On Mon, Jun 29 2009, 13:56 GMT
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