Dollar Struggles As NFPs Disappoint, Euro To Threaten Support

By David Song, Currency Analyst

Talking Points
  • U.S. Dollar: NFPs Disappoint, Speculation For QE3 Resurfaces
  • Euro: Struggles To Hold Gains Amid Debt Fears, 1.3000 To Give Way
  • British Pound: Building Base Around 1.5800, Upward Trending Channel In Focus

U.S. Dollar: NFPs Disappoint,Speculation For QE3 Resurfaces

The Dow Jones-FXCM U.S. Dollar Index ( Ticker: USDOLLAR ) slipped to 9,979 as NFPs crossed the wires at120K versus forecasts for a 205K print, and the reserve currencymay track lower throughout the holiday trade as bets for QE3resurface. Beyond the headline figure, the jobless rateunexpectedly decline to 8.2% from 8.3% as discouraged workers leftthe labor force, while we saw a small pickup in wage growth, whichcertainly bodes well for private sector consumption. Indeed, theslowdown in job growth may spark some dovish comments from theFederal Reserve, but we expect the central bank to preserve itscurrent policy throughout 2012 as the economic recovery graduallygathers pace. Nevertheless, as 9,950, the 61.8% Fibonacciretracement, provides interim support, the pullback in the USDOLLARcould provide a buying opportunity, and we expect the reservecurrency to appreciate further over the near-term as the FOMCcontinues to move away from its easing cycle.

Euro: Struggles To HoldGains Amid Debt Fears, 1.3000 To Give Way

The Euro advanced to 1.3111 amid the dismaldevelopment coming out of the world’s largest economy, butthe rebound in the EURUSD may be short-lived as it struggles tohold above the 38.2% Fib from the 2009 high to the 2010 low around1.3100. Indeed, heighten fears surrounding the sovereign debtcrisis continues to cast a bearish outlook for the single currencyas market participants see another bailout for Portugal, and theongoing turmoil in the periphery countries may push the EuropeanCentral Bank to further expand its balance sheet as the governmentsoperating under the fixed exchange rate system become increasinglyreliant on monetary support. As the fundamental outlook for theregion remains bleak, we should see 1.3000 give way, and the EURUSDlooks poised to give back the advance from earlier this way as itcarves out a lower top coming into April.

British Pound: Building Base Around1.5800, Upward Trending Channel In Focus

The British Pound pared the decline from earlier this month tomaintain the upward trending channel from earlier this year, andthe pair looks poised to track higher in the following week as itappears to be building a short-term base around 1.5800. As theeconomic docket for the U.K. remains fairly light, we should seethe technicals heavily influence the GBPUSD in the week ahead, andwe anticipate to see another run at 1.6000 as the pair continues tocarve out higher highs paired with higher lows. However, as theBank of England Minutes are due out on March 18, we may see thepound-dollar consolidate ahead of the policy statement, but we maysee the MPC continue to soften its dovish tone for monetary policyas central bank officials anticipate to see a stronger recoverylater this year.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong

To be added to David's e-mail distribution list, send an e-mail with subject line "Distribution List" to dsong@dailyfx.com.

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FX Upcoming

Currency

GMT

EDT

Release

Expected

Prior

USD

19:00

15:00

Consumer Credit (FEB)

$12.000B

$17.776B

Currency

GMT

Release

Expected

Actual

Comments

JPY

5:00

Leading Index (FEB P)

95.8

96.6

Highest since January 2008.

JPY

5:00

Coincident Index (FEB P)

93.6

93.7

EUR

6:45

French Central Government Balance (euros) (FEB)

--

-24.2B

Widens for the first time since October.

EUR

6:45

French Trade Balance (euros) (FEB)

-5200M

-6398M

Largest deficit since September.

USD

12:30

Change in Non-Farm Payrolls (MAR)

210K

120K

Slowest pace of growth since October. Jobless rate lowest since January 2009.

USD

12:30

Unemployment Rate (MAR)

8.3%

8.2%

USD

12:30

Change in Private Payrolls (MAR)

215K

121K

USD

12:30

Change in Manufacturing Payrolls (MAR)

20K

37K

USD

12:30

Change in Household Employment (MAR)

--

-31

USD

12:30

Underemployment Rate (U6) (MAR)

--

14.5%

USD

12:30

Average Hourly Earning (MoM) (MAR)

0.2%

0.2%

Fastest pace of growth since December.

USD

12:30

Average Hourly Earning (YoY) (MAR)

1.9%

2.1%

USD

12:30

Average Weekly Hours (MAR)

34.5

34.5
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/us_open/2012/04/06/Dollar_Struggles_As_NFPs_Disappoint_Euro_To_Threaten_Support.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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