Forex Traders Focused On Friday
The US dollar eased a bit in the Asian session but the rally still remains intact. The greenback is trading at 97.46 down by 6 points as markets open. The dollar was steady Monday despite a first-quarter contraction in the US economy as investors look for clues to a pickup that would justify an interest rate rise this year. Traders will probably stay long heading into payrolls data. The euro weakened to 1.0960 and 135.94 yen, as Greece´s bailout talks drag on with the cash-strapped country facing a debt repayment deadline on June 5. Time is running out for Greece to reach a deal with its international creditors to unlock 7.2 billion euros in bailout cash. The heads of Germany, France, the International Monetary Fund, the European Central Bank and the European Commission agreed at a meeting late on Monday to stay in close contact in the coming days to work on Greek debt negotiations, as Athens and its lenders struggled to reach deal that would prevent the country from defaulting on its debt.
Traders are focused on the June 5th data with the NFP due in the US session while the big OPEC meeting will be taking place on the same day. Speculators are eyeing Friday’s US nonfarm payrolls report for a further gauge of the strength of employment conditions. The report is expected to show 225,000 jobs created in May, according to a Reuter’s poll of economists.
On Wall Street stocks began the month with modest gains after the data. Consumer spending remained flat in April, but construction spending and manufacturing gained momentum, backing the view that the US central bank is on track to begin to hike rates later this year. The economic reports helped US Treasury yields rise to one-week highs, giving the greenback a lift.
Boston Fed President Eric Rosengren, who is not a voting member of the Federal Open Market Committee, said on Monday he would like to begin raising rates as soon as possible, but also noted risks from the slowdown in China and Europe and the fact that US growth is still not strong enough.
The yen weakened beyond 125 per dollar for the first time since 2002 as prospects for higher U.S. interest rates this year spurred demand for the greenback. The JPY is trading at 124.65 this morning.
The U.S. currency has strengthened against 13 of 16 major peers over the past week after Federal Reserve Chair Janet Yellen said in May she expects to raise benchmark borrowing costs in 2015. The yen has dropped more than 30 percent since 2012 as the Bank of Japan carries out unprecedented bond buying to spur inflation.
The Aussie has had an active morning with the RBA meeting today. The Aussie was trading below the 76 level but bounced after the current account printed better than expected. Just minutes later the RBA decided to hold rates and policy. The Aussie further gained to at 0.7648. The statement also notes that the “Federal Reserve is expected to start increasing its policy rate later this year”. But when it looks to the domestic economy it notes that “the available information suggests the economy has continued to grow, but at a rate somewhat below its longer-term average”.
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