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May 06 - 05:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Hits Week's High As Treasury Yields Lag Into NFP

By Randolph Donney  —  May 06 - 02:56 PM

The dollar fell on Thursday, ceding most of this week's gains against the euro after euro zone data again beat forecast nL8N2MT3J7 while unexpectedly low U.S. jobless claims nL1N2MS2IY failed to lift Treasury yields after Fed officials fended off taper talk earlier this week.

Aside from claims, U.S. data failed to match elevated expectations this week, helping Treasury yields to slip further versus Bund yields.
Though the numbers have been robust by historical standards investors are awaiting Friday's monthly employment report, forecast to show a 978,000 rise in non-farm payrolls.

EUR/USD rose 0.33% after attracting strong demand by Wednesday's low ahead of major support.
Thursday's 1.20715 high on EBS stalled by the 50% Fibo of the fall from last Thursday's 1.2150 peak nL1N2MT1H4.

Market reaction to Friday's jobs report will be key, particularly whether it halts the Treasury yield curve flattening since late March that occurred as Bunds steepened.

Sterling failed to improve after the BoE slowed its bond buying and lifted economic recovery forecasts for this year nL8N2MT5IS while Governor Andrew Bailey cautioned to "not get carried away" by the recovery.
Cable was down 0.12% as markets awaited Scottish election results nL1N2MT144nL1N2MT0KK, which could trigger a showdown over a new independence referendum.

USD/JPY edged down into cloud top and Tuesday's low by 109.04, as well a string of large 109 expiries that both attract and support prices.

Japan's return from holiday highlighted the fall in 10-year Treasury-JGB yields spreads this week.
USD/JPY needs to close above Fibo and weekly on-close pivot point resistance at 109.64/77 after Friday's jobs report to resume the stalled uptrend toward March's 110.97 peak nL1N2MT1RE.

AUD/USD shook off an early dive on worries about relations with China nL1N2MT048, hitting a new high for the week and up 0.35%.
Tuesday's low at key 50% Fibo support has set the stage for another run at April's repeated highs just shy of 0.78257, the 61.8% Fibo of the February to April ABC correction.

USD/CAD fell 0.67%, breaking its January 2018 low on its way to 3-1/2-year lows on rising commodity prices and BOC policy normalization ahead of the Fed.
A massive 2016-2020 double-top reversal has broken the up trend-line across 2015 and 2017 lows in a move akin to freefall.

Other commodity-linked and higher yielding currencies made big gains against the dollar.

Ether made its sixth consecutive record high, with bitcoin trailing well behind again, unable to even make new highs for the week.

The focus Friday is on the U.S. jobs report, and whether it can revive the uptrend in Treasury yields the dollar has struggled without since late March, despite world-beating economic data.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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