Stock indices extended gains during the North American session, with upside fueled by progress in the US debt ceiling negotiations and easing fears of an energy crisis in Europe. The US Senate voted to raise the debt ceiling by $480 bln until December 3. The euro saw rangebound trading within the band of 1.1548-1.1572 (24 pips). Volatility was low as traders were reluctant to open large positions ahead of today’s US jobs report.
Today’s macro agenda (GMT 3)
- 14:00 UK: BoE quarterly bulletin
- 15:10 ECB President Christine Lagarde speech
- 15:30 US: NFP report (September), unemployment change and rate; Canada: unemployment change and rate (September)
- 20:00 US: Baker Hughes weekly oil rig count
Current outlook
All major currencies have been trading in the red this morning. The euro slipped to 1.1541 amid an uptick in the 10-year UST yield to 1.60%. Over the last hour, the yield started to decrease, exerting a positive effect on the single currency, which by the time of writing was trading at 1.1549.
Today, all eyes will be on the September NFP report. If the data falls short of expectations, the Fed may revise its taper timeline, which would lead to weakness in the dollar. Conversely, if unemployment decreases and over 500k new jobs are created, dollar buying will resume in earnest. Wages will also be an important indicator in the jobs report, as well as how much they were revised up or down in July and August.
Lagarde speaks Before the release of the report, so we could see heightened volatility in the euro ahead of the NFP release.
Technical analysis
Price action continues to hover below the 55-day SMA (balance line). Euro crosses are trading in positive territory, so buyers are gaining more support than the pound. Low volatility is expected on the FX market until 12:00 GMT. Traders are predictably taking a wait-and-see approach heading into a key event. It would be good if the euro could stabilize at 1.1555 before NFPs come out.
EURUSD can be expected to oscillate today within a range of 1.1505-1.1600. The more the actual NFP figure deviates from the forecast, the steeper the gyrations will be. NFP is an unpredictable indicator, so it’s hard to say just how speculators will react and where the market will close.