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The long euro market bumped into yet another setback on Thursday, after the dovish comments from ECB President Mario Draghi during yesterday's policy meeting. The mention that there had been some considerations to impose negative deposit rates, coupled with downgrades to both growth and inflation forecasts for the bloc in 2013, did not sit well with a market long the shared-currency, leading to a slump to fresh December lows.

Leaving the ECB-inspired sell-off behind, markets will now concentrate on today's U.S. employment data, thus expect only marginal moves during the next European session, with short-lived stop loss hunting or positing adjustment to provide some minor excitement, all within narrow margins as interest diminishes ahead of the risk event.

According to Valeria Bednarik, chief analyst at FXstreet.com: "A strong drop in job creation is expected, due partially to hurricane Sandy. Market awaits for a 89K reading from a previous 171K. The result, will likely set the tone for December for the EUR/USD, with a positive reading, diluting chances of FED easing this month, and therefore supporting the greenback. A negative reading could trigger risk aversion no doubts, but in that case dollar gains will likely remain limited."

Kathy Lien, co-founder at BK Asset Management, wonders, whether or not FX traders will look beyond the Sandy impact to set today's market tone. The analyst believes that with jobless claims falling to 370K this week and the retail sector reporting strong holiday shopping sales, investors may look beyond a weak report.

Kathy notes: "If non-farm payrolls rise by less than 50K, that would be a different story because it would only be a third of last month's gains but if it rises between 75K-100K, there may only be a limited reaction in the FX market. Even if it exceeds 100K, gains in the USD may be limited because stronger payrolls won't stop the Fed from announcing additional asset purchases next week to replace the stimulus provided by Operation Twist, which expires at the end of the year."

The fundamental team at FXstreet.com, after surveying economists contributing to our NFP forecast report, concludes that this month's number remain very divided on the direction in which U.S. employment moved in November. As FXstreet.com analyst Katarzyna Komorowska notes, "the majority opts for a result in the range of 101-150K, which is considerably below the previous reading of 171K. They also believe unemployment rate should stay unchanged at 7.9% or tick up slightly to 8%."

Technically for the EUR/USD, the AceTrader FX Team sees yesterday's sharp sell-off as indicating sellers may be now in control for another test of lower levels, with the team suspecting that 1.3000 may cap upside. Their strategy is to sell on recovery, with the risk of stronger gains to 1.3020 although still favoring the downside as long as 1.3042 holds.

Source: Will NFP Confirm EUR/USD Weekly Losses?