Market Session Recaps

London Session

Thu, Jul 3 2008, 14:39 GMT
by Forex.com Research Desk

FOREX.com


The buck sold off against the euro in the London session but gained some ground against the other majors as the market awaits the ECB rate decision/press statement and the US nonfarm payrolls report.  Eurozone retail sales for May came in double consensus expectations, rising 1.2% on the month after a -0.6% result the previous month.  This helped EUR/USD rally from an open near 1.5865 to a London close near 1.5895.  The pair is now firmly above the 1.5800 mark and barring an exceptionally bullish US NFP report and a relatively dovish ECB, we expect it will remain there.

Loonie (USD/CAD) was higher in the session in spite of the fact that oil prices hit a new record high.  Crude oil traded above $145/bbl for the first time ever and is now quickly approaching the $150/bbl mark.  Despite this, USD/CAD rose in the session from an open near 1.0135 to close around 1.0160.  Selling of the USD today on weaker employment data/hawkish ECB should exacerbate losses in USD/CAD as high oil prices will then come to the fore as well.

USD/JPY traded in a relatively tight range in the session, opening near the 106.17 mark and closing a touch higher near 106.28.  Stocks around the globe were down overnight while US stock futures are pointing to a weak open here as well.  We would expect weakness in stocks to help the carry trade come off somewhat and USD/JPY should trade lower on a weak US stock market performance today.

As we said in our note yesterday, we would expect significant USD selling on an NFP decline of the triple digit magnitude in the order of roughly 100 pips in both EUR/USD and USD/JPY. If a weaker than expected report is coupled with Trichet coming out more hawkish than expected and signaling that the rate hike is not a "one and done" event, then EUR/USD should test back up towards the 1.60 area and USD/JPY near the 103.00 mark. The upside to the greenback is likely to be short lived on a better employment report and will only be sustainable if it is coupled with Trichet signaling that ECB rates are on hold after the 25 bps increase. Stay tuned this NY morning at 0830ET.
 

Upcoming Economic Data Releases (NY Session):

  • 7/3  11:45  EC ECB announces interest rate decision                   4.00%       4.25%
  • 7/3  12:30  EC ECB Pres. Trichet holds press conference  
  • 7/3  12:30  US Change in Nonfarm Payrolls JUN                            -49k         -55k
  • 7/3  12:30  US Unemployment Rate JUN                                       5.50%      5.40%
  • 7/3  12:30  US Change in Manufact. Payrolls JUN                          -26K        -33K
  • 7/3  12:30  US Average Hourly Earnings MoM JUN                         0.30%      0.30%
  • 7/3  12:30  US Average Hourly Earnings YoY JUN                           3.50%        - -
  • 7/3  12:30  US Average Weekly Hours JUN                                     33.7          33.7
  • 7/3  12:30  US Initial Jobless Claims 28-Jun                                    384K          - -
  • 7/3  12:30  US Continuing Claims 21-Jun                                       3139K         - -
  • 7/3  14:00  US ISM Non-Manf. Composite JUN                                 51.7        51.5

Published on  Thu, Jul 3 2008, 14:40 GMT

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