The US Dollar (USD) remains vulnerable after the spate of downbeat economic reports. The focus is now being shifted towards the Friday’s nonfarm report which will determine the long term direction of the greenback. Big moves are not expected before the release of NFP as investors remain cautious. Let’s take a quick look at some major currency pairs
Commodity markets slowed their depreciation amid the weaker dollar and a bounce on the Chinese market. As a result, risky currencies have also regained some ground. We review this rebound as temporary. NZD/USD tested the 0.6600 resistance today, but failed to overcome it. Don’t miss the NZ employment figures tonight. USD/CAD holds above the key support at 1.3100.
EUR/USD came under resumed pressure after the US factory orders release. Tomorrow we’ll be watching service PMIs in euro zone. Bearish risks remain very high. GBP/USD holds in a sideways range above 1.5500. The market clearly remains uncertain about the BOE and the Fed’s policy intentions.
On Wednesday we’ll watch services PMI. Thursday is going to be a key day for the cable – BOE meeting, quarterly inflation report and policy minutes are on the schedule. Buy GBP against the EUR and JPY.
USD/JPY consolidates slightly below the 124.00 mark. Resistance lies at 124.40/50, but this level could be broken on strong US data on Wednesday. Trend support – 123.70.
Meanwhile traders boosted bets on a September rate hike in the U.S. after Federal Reserve Bank of Atlanta chief Dennis Lockhart said he would only endorse putting it off should there be a significant deterioration in economic data. Analysts believe that Lockhart’s comments made the market wary of rate hikes once again. Caution toward the Chinese economy continues to weigh on the market as well.”