Previous session overview
The euro is down against the yen and dollar after Wednesday morning’s ADP payrolls report showed a greater loss of U.S. private-sector jobs than had been expected.
The disappointing jobs numbers sent a new wave of risk aversion through the market, though the knee-jerk reaction to the numbers still had currencies trading within their well-worn ranges.
Automatic Data Processing released its private sector jobs report Wednesday, showing 298,000 jobs were lost in August, a worse-than-expected number.
A stream of positive economic data, including Tuesday’s release of a report showing an uptick in U.S. manufacturing, had not been enough for investors to be sure of a full economic turnaround, analysts said. Wednesday’s jobs report will only add uncertainty to the outlook for recovery.
In European mid-day trading, improving stocks stopped the risk currencies slippage. The euro settled above 1.42 and the pound held above its overnight low of USD1.6113. The dollar recovered from its 7-week low of JPY92.68. European bourses were around 0.5% lower after dropping 1% earlier in the session.
Currency markets continue to follow the lead of equity markets, which analysts said remain unsure of a global economic recovery.
EURUSD eases to USD1.4200 area again having dipped to, and bounced from, this area around earlier US data releases. Talk of sovereign demand sub USD1.4200 continues to circulate, was attached to the recent bounce that stalled at USD1.4210.
EURJPY stops in the cross noted on a break of JPY131.00 as lows are extended under JPY131.10. Techs paint an increasingly bearish picture after last night’s close under the Ichimoku Cloud and 100-day moving average, seeing little to support ahead of the 76.4% retrace of the July-August rally at JPY129.77.
Pound eases back under USD1.6200, having earlier posted recovery highs at USD1.6253 on a reported UK clearer buy order. Bids seen placed at USD1.6185/80 (USD1.6183 50% USD1.6113/1.6253) a break below to open a deeper move toward USD1.6165 with bid interest noted from here and extending toward USD1.6145. Offers now noted from USD1.6253 through to USD1.6268 (post ISM recovery highs before Tuesday’s drop to USD1.6113).
Markets continue to wait for Friday’s U.S. non-farm payrolls report, which some analysts said could break currencies from their recent well-worn ranges, though most expect currencies to remain range bound until after the U.S. Labor day holiday.
Whether Friday’s numbers improve, jobs are still being shed, which puts a crimp on consumption, something economists said is key to a full recovery from the recession.