By Omer Esiner of Travelex

The U.S. dollar was mostly steady near the middle of its recent ranges overnight as investors bided their time ahead of this morning's key U.S. jobs data for February, which came in better than expected.

Asian markets were buoyed by comments from China's premier who signaled that accommodative monetary policy would remain in place, despite recent attempts by Beijing to slow credit growth. Firmer stocks and commodities, however, had little impact on currencies, which remained hemmed in tight ranges ahead of this morning's U.S. employment report.

This week, investors' concerns over a debt default by Greece were assuaged by Athens' pledge to cut its budget deficit by another 5 billion euros and by a surprisingly successful Greek bond auction. Greece's prime minister is set to visit Germany's chancellor in Berlin today with markets on the lookout for any clues about a possible bailout for Greece.

The yen fell across the board following a report that the BOJ is considering further policy-easing to spur growth in Japan's stagnant economy and to avoid revisiting its decade-long battle against deflation.

EUR: The euro held mostly steady near the middle of its recent ranges overnight. The single currency was lifted off of multimonth lows this week after Greece announced another round of budget cuts and a Greek government bond auction found surprisingly strong market demand. The reduction in debt default concerns prompted many to trim their short-EUR positions after pushing the single currency sharply lower since the start of 2010.

While the euro may receive additional short-term support from signs that Germany will ultimately stand behind Greece, its upside will remain severely limited by a number of key issues. First, Athens' ability to implement its painful budget cuts remains suspect. Already, the nation's largest unions are protesting pay cuts and tax hikes and will continue to make pushing through needed reforms very difficult.

Second, the equally dire state of fiscal affairs in a number of other eurozone nations will keep the issue of sovereign credit risk in the 16-member economy at center stage. Finally, the fiscal tightening needed to bring a number of nations' budgets down to more manageable levels will ultimately undermine already anemic growth in Europe and postpone any policy normalization by the ECB. Consequently, euro rallies are likely to remain unsustainable.

JPY: The yen gave up some of its recent gains after sources reported that the Bank of Japan was mulling easing monetary conditions in the world's second largest economy again in the coming months. With lending rates at just 0.10%, the BOJ would likely increase its fund-supply operations, where it extends short-term liquidity to banks. Japan's very lackluster recovery has prompted the government, which remains fiscally constrained by a huge budget deficit, to pressure the BOJ to continue to stimulate growth. The yen remains vulnerable to additional signs that monetary conditions will ease, especially at a time when many central banks are considering tightening policy.

CAD: The Canadian dollar remains near the upper end of its recent ranges, buoyed by the rise in commodities like crude oil, which is back above $81/barrel. The general reduction in investors' nervousness about a Greek credit default added to the appeal of assets like the CAD that are heavily influenced by the global growth outlook. Finally, the relatively healthy state of Ottawa's balance sheet has added to the CAD's appeal. Yesterday's federal budget highlighted that notion, with lawmakers planning to eliminate the deficit once growth meaningfully returns to the economy. The loonie should continue to outperform most of its rivals.

USD: The U.S. economy shed just 36,000 nonfarm payrolls last month, which was well below the 50,000 forecast and much better than many analysts' snow-influenced worst-case scenarios. The unemployment rate held steady at 9.7%, while average hourly earnings rose by 0.1%(m/m). Some of the jobs lost in construction were offset by the hiring of census workers, a trend likely to support the employment picture in the months ahead. The dollar initially soared against the yen and euro in very choppy trade immediately after the data.
Omer Esiner serves as the Senior Currency Market Analyst at Travelex, Inc. a global financial institution specializing in corporate foreign exchange services and international payment solutions. In this capacity, he monitors, analyzes and interprets the economic, financial, political and technical factors that drive the movements of more than 100 currencies for Travelex. Mr. Esiner explains the currency markets' reaction to market events to clients, employees and members of the media.

You can view his daily reports, recording briefings, and quarterly reviews posted here. As an expert in foreign exchange, Mr. Esiner is quoted regularly by the financial media including The Wall Street Journal, CNN, Dow Jones Newswires, Reuters, the Nightly Business Report, National Public Radio, among others. Based in Washington, D.C., Esiner joined Travelex in February 2000. Prior to his current position, Esiner was a currency trader for several years. Mr. Esiner holds a bachelor's degree in economics from the University of Maryland, College Park. He is fluent in Turkish and proficient in Spanish.