Yen Looks To US Payrolls
USDJPY stayed propped up during the Asia session in anticipation of a consensus-beating US employment report. A strong ADP payrolls number on Thursday has helped stoke expectations, although methodological changes to that survey further undermines its status as a ‘leading indicator’ for today’s BLS payrolls survey. Overnight, Boston Fed President Rosengren served reminder of what is at stake, declaring that the Fed should keep buying bonds until the unemployment rate falls to 7.25%. Now at 7.8% there is clearly little prospect of an imminent cessation of quantitative easing, and our US economists still expect the Fed to more than double the pace of bond purchases in December. USDJPY traded 80.11- 80.29 in Asia, and continues to lurk below the important intraday high of 80.62 last seen on Jun. 25 – strong employment numbers today could see a clean break to the upside, but our US economists think consensus opinion is fair. Meanwhile in Europe, Greek newspaper Kathimerini calculates that the coalition government might only be able to muster 153 votes in favour of legislation due to come before parliament on Wednesday and the following Sunday. A simple majority of 151 votes is needed to pass bills in the 300 seat parliament, and it is still an open question whether parliamentary ratification will happen on schedule. Where the euro is trading today does not reflect the considerable risk of another political crisis in Greece within the next two weeks.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank