USD: The Dollar was able to put together a modest rebound from overnight pressure, but is making little headway getting back into positive territory after yesterday’s massive washout and today’s increasingly critical events. For a change, it was not sluggish US data but a rapid positive shift with overseas sentiment that pushed the Dollar into a tailspin. Clearly the market’s focus will be on today’s US Employment numbers, as expectations for near-term Fed “tapering” appear to be hinging on the market’s reception for today’s data. The weak ADP survey earlier this week may have done the Dollar a favor, as it has diminished the “whisper” forecasts for today’s Non-Farm Payroll readings. While a sub-100,000 Non-Farm Payroll number would no doubt pile further pressure upon the Dollar, there is also a good chance that an upside Non-Farm surprise could trigger a huge Dollar rebound, particularly versus the Yen. The Dollar may climb up towards the 81.65 level coming into this morning’s trading, and then will clearly take overall direction from how the market views today’s US jobs data, and how it will impact expectations of Fed tapering going forward.
EUR: The June Euro is finding modest pressure early this morning, but has held onto a large portion of yesterday’s upside breakout to new 31/2-month highs. Decent German trade numbers this morning are having little impact with the Euro, which continues to benefit from a fairly positive market reception to yesterday’s ECB meeting. Although reviews for ECB President Draghi have not been kind, his comment that there is no reason to implement negative Euro zone deposit rates provided a clear boost to the Euro. Given yesterday’s sharp updraft, there is plenty of downside potential if today’s US Payroll numbers provide a positive surprise but it may be difficult to retest yesterday’s high without fresh positive news from inside the EU itself. The June Euro may slide down towards the 132.15 area early today, and will be another currency that will be looking at US jobs data very closely.
GBP: The June Pound continues to slide further away from yesterday’s 31/2-month high as end-of-week profittaking has begun well in front of today’s US Employment numbers. Although the Bank of England meeting is out of the way and recent UK economic data has had a generally positive tone, the Pound remains more than 51/2 cents above the late-May lows and would clearly be vulnerable to a sharp pullback if the US jobs data pulls off a positive surprise. The June Pound will find support around the 155.24 area early this morning, and is likely to remain on the defensive through the balance of today’s session unless there is a significant disappointment with today’s US numbers.
JPY: The June Yen continued to see vicious price action during the overnight session, but is coming into this morning’s trading with sizable gains and a fresh new high for the move. While the Nikkei finished with a 0.2% decline, that index is down close to 19% since May 22nd as turbulent Japanese equities remain the main source of safe-haven support for the Yen. Although one major trader is using this “pullback” to buy Japanese stocks while selling the Yen, massive amounts of short-covering and unwinding of carry trades are keeping the Yen at a fairly high valuation early this morning. A positive spin for today’s US jobs data could trigger a huge reversal move in the Yen later today, particularly if Japanese equities markets are able to stabilize early next week. The June Yen will likely hold above the 104.00 level going into this morning’s US economic report window, but would provide the largest “bang for your buck” of any long Dollar position in reaction to good US jobs numbers, given the significant gains seen during this week’s trading.
CHF: The June Swiss is posting moderate gains, but remains well below yesterday’s 1-month highs coming into this morning’s trading. Given yesterday’s sharp rally, it may be difficult for the Swiss to reach new high ground unless today’s US jobs numbers have a decisively negative tone. The June Swiss may fall back into negative territory early this morning, and is another currency that could give back a significant portion of recent gains if this morning’s Payroll numbers are able to beat market expectations.
CAD: The June Canadian has calmed down from yesterday’s volatile trading session, and has been fairly subdued in front of today’s major market events. The Canadian Dollar will have Employment data from both sides of the US/Canada border to digest, with the Canadian numbers notorious for their potential for surprise results. If both sets of data can exceed market forecasts, however, the Canadian Dollar has a good chance to finish out this week with a rally up into new high ground. The June Canadian may rise up towards the 97.50 area early today, and then will take direction from the market’s reception for both the Canadian and US jobs numbers going into the weekend.