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European and US summary

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USD Edges Up Ahead of Jobs

Thu, Nov 5 2009, 22:39 GMT
by Korman Tam

Forexnews.com

11/5/2009 2:45 PM: EUR/$..1.4863 $/JPY..90.64 GBP/$..1.6575 $/CHF..1.0167 AUD/$..0.9096 $/CAD..1.0646

USD Edges Up Ahead of Jobs

The dollar was higher by the afternoon Thursday session as traders took to the sidelines ahead of tomorrow’s key US labor report. The greenback rebounded from a near one-week low against the euro around 1.4917 to bounce toward the 1.48-figure.

The economic reports released this morning included weekly jobless claims, Q3 productivity and Q3 labor costs. The weekly jobless claims improved to 512k versus an upwardly revised 532k in the previous week. Meanwhile, Q3 productivity blew away consensus estimates for a decline to 6.4%, instead surging to 9.5% from 6.9% in the previous quarter – its highest level in the third quarter since 2003. The preliminary reading for labor costs in Q3 declined by more than expected, falling by 5.2% compared with a 6.1% drop in the previous quarter.

Traders will look ahead to Friday’s key economic reports, consisting of the October unemployment rate, non-farm payrolls, September wholesale inventory and sales, and consumer credit. Consensus estimates are looking for the unemployment rate to climb to new multi-decade high at 9.9% from 9.8% in September. Meanwhile, non-farm payrolls are seen improving to 175.0 jobs lost in October compared with 263k jobs shed in the previous month.
 
Euro Relinquishes Gains

The ECB left monetary policy unchanged at 1.0% when it announced its decision earlier in the session. In the accompanying press conference by ECB President Trichet, he hinted at the prospects for reining in the Bank’s quantitative easing, saying “the Governing Council will make sure that the extraordinary liquidity measures taken are phased out in a timely and gradual fashion and that the liquidity provided is absorbed in order to counter effectively any threat to price stability over the medium to longer term”.

The euro initially popped higher following the more hawkish commentary from Trichet, rising past the 1.49-handle to 1.4917 before retreating back toward the 1.4850-level. Support starts at 1.4820, followed by 1.48 and 1.4765. Subsequent floors are eyed at 1.4730, backed by 1.47 and 1.4650. Meanwhile, gains will target resistance at 1.49, followed by 1.4930 and 1.4970. Additional ceilings will emerge at 1.50, followed by 1.5040 and 1.5080.

Published on  Thu, Nov 5 2009, 22:39 GMT