USD steadies as Forex market awaits Payrolls data
The USD continued to edge higher against the Euro, but pared some of its gains as weekly jobless came in higher than expected. The Single currency got a boost after reports surfaced that China are willing to buy Spanish government debt.
Weekly Jobless claims higher than expected
The US dollar continued to edge higher on Thursday, following yesterdays’ surge on strong US private sector jobs data. A series of robust data from the US has driven the greenback higher against its major counterparts, while increasing optimism that the world’s largest economy may recover faster than other major economies. Foreign currency markets are however on edge ahead of tomorrow’s key data, as the risk is that the dollar may pull back if payrolls data is not similarly stronger. Meanwhile, Weekly Jobless claims came in slightly higher than expected, at 409’000 versus 400’000, which may dampen expectations for tomorrow’s announcement.
China confirms reports that it has been increasing holdings of European Government debt
The euro got a brief boost during the European session as reports surfaced that China was willing to buy 6 billion euros of Spanish government debt. These reports were confirmed by vice commerce minister Gao Hucheng who was quoted as saying that China has been increasing its holdings of European government debt, including that issued by Spain. The single currency however struggled to hold its gains above 1.3120 against the dollar, quickly dropping back to below 1.3100, and now within sight of the key support represented by the 200-day moving average at 1.3081.
The single currency barely reacted to economic data from the euro area, which showed euro zone sentiment jumping in December but retail sales falling in November. France passed a smooth auction of 10, 20 and 50-year government bonds worth 8.975 billion euros.
Unexpected drop in UK service sector
The pound slipped against the dollar and pared its gains against the euro as an unexpected contraction in UK Services PMI for December to 49.7 versus 53.0 the previous month, which added concerns over the UK’s fragile economic recovery. The sterling was down a quarter percent versus the greenback, while is still up 0.10 percent versus the euro.
Emman Xuereb - Trading Desk - RTFX Ltd
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