The euro staged a mild recovery off overnight lows in early Asian trade Friday, a move seen as a correction of the losses seen after ECB President Mario Draghi’s press conference. Dealers said a lowering of ECB growth forecasts, along with Draghi’s remarks at the regularly scheduled post-meeting press conference led some in the financial markets to suspect that the ECB may be preparing the ground for future rate cuts, undermining the appeal of the euro. The single currency fell to a $1.2950 low in the U.S. session overnight, marking a sharp withdrawal from this week’s $1.3127 high, which had marked the euro’s highest in almost two months. This morning in Asia, euro-dollar staged a mild recovery but has thus far failed to even take back the $1.3000 handle. The pair was last at $1.2971, near the top of a $1.2957 to $1.2972 range.
The Australian dollar meanwhile was steady this morning, last at $1.0480, after the October trade balance came in line with expectation. The deficit widened the most in 10 months but at A$2.09 billion, it was close to median consensus of A$2.2 billion. The deficit was driven higher by a 3% month-on-month increase in imports while exports rose only 0.4%. Much of the increase in imports was due to a 13% on-month rise in capital goods, indicating Australian businesses are taking advantage of the higher currency to ensure their costs remain subdued.
The New Zealand dollar has also been steady after testing resistance of $0.8350 overnight, following a less dovish than expected statement from the Reserve Bank of New Zealand in the monetary policy statement Thursday. On a trade-weighted basis, the currency is at highest level in over a year and just 1% below the 75.19 post-float high. Following the New Zealand dollar’s outperformance in the last few days, and lack of jawboning from RBNZ Governor Graeme Wheeler, Bank of New Zealand analysts have raised their forecast for the currency and lifted their end-2013 forecast to $0.8100 from $0.7800 as they no longer expect the currency to head gradually lower in the second half of 2013.
Ahead, non-farm payrolls data out of the United States are due tonight. The median estimate of economists currently looks for non-farm payrolls to gain by 95,000 (range 25,000 to 171,000) and for the unemployment rate to come in flat at 7.9% (range 7.9% to 8.1%).
EasyForexNews Research Team