Daily Market Outlook

Fri, Jul 4 2008, 00:13 GMT
by AceTrader Team

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Market Review -  03/07/2008 21:49 GMT

The greenback rallies broadly after jobs data

The greenback rose broadly on Thursday after the non-farm payrolls data suggested the U.S. job market and economy are not as dire as economists had feared, while ECB president Jean-Claude Trichet gave a less aggressive tone on prospects for further interest rate hikes in the eurozone.  
  
The greenback started to rise after the release of U.S. jobs data which came out at -62K (close to the forecast of –60K) and together with the "no bias" remarks from ECB president Trichet on eurozone interest rates (ECB raised rates by 25 b.p. to 4.25% as widely expected yesterday), the dollar rallied to 1.5682 against the euro in mid-afternoon trading in New York, it was the biggest one-day gain since April 24, reversing from the intra-day low at 1.5910 made before the ECB’s rate decision. The U.S. dollar also rose one percent higher against a trade-weighted basket of six major currencies to 72.765.  
  
The broad-based strength in U.S. dollar also sparked a selloff in sterling (weak U.K. services PMI data has already led to selling of the British pound in European morning) and cable fell to the day’s low of 1.9800 before stabilising in late U.S. session. Against the Japanese yen, dollar rose to 106.93 after the jobs data but pared some of its gains as another report showed a weaker-than-expected reading on the U.S. service sector in June (ISM non-manufacturing came in at 48.2 for June compared with 51.7 in May).  
  
Futures on the Chicago Board of Trade showed an 18 percent chance the Fed will increase its target rate for overnight lending between banks by a quarter-percentage point at its August 5 meeting, compared with 25 percent odds yesterday.   
  
On Friday, economic data releases include Japan leading indicator, German factory orders and Canada Ivey PMI. The U.S. market will be closed in observance of the U.S. Independence Day holiday.

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Published on  Fri, Jul 4 2008, 00:13 GMT

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