Euro Steady Against Most Majors; U.S. Non-farm Payrolls In Focus

Euro Steady Against Most Majors; U.S. Non-farm Payrolls In Focus


The euro see-sawed against most major rivals in early deals Friday, as the market is reluctant to take positions ahead of the U.S. non farm payrolls data, which is due out later in the global day. The common currency was a clear under-performer against the pound as the latter firmed up after the U.K. PPI report.
The U.S. Labor Department is scheduled to release its monthly employment report, which includes both private and public sector jobs. Economists expect the report to show an increase of about 90,000 jobs in June compared to the addition of 69,000 jobs in May. The unemployment rate is expected to remain unchanged at 8.2 percent.
The prelude for today's pivotal job market data was quite encouraging, as yesterday's ADP private sector job growth in June was stronger-than analysts had predicted and jobless claims for the week ended June 30th showed an unexpected drop.
ADP said the private sector added 176,000 jobs in June following an upwardly revised increase of 136,000 jobs in May. Economists had expected private sector employment to increase by about 95,000 jobs compared to the increase of 133,000 jobs originally reported for the previous month.
The jobless claims reported showed that 374,000 new claims for unemployment for the week ending June 30, marking a notable drop of 14,000 from the previous week's revised figure of 388,000. The claims also came in well below the 386,000 level predicted by most economists.
Monetary actions of the Bank of England and the European Central Bank on Thursday were in tandem with market expectations but the Chinese rate cut surprised the market, with the PBoC cutting rate for the second time in a month.
The European Central Bank cut its benchmark interest rate to below one percent for the first time in its existence. The main refinancing rate was cut by a quarter-point to 0.75 percent. The move was in line with economists' expectations.
ECB President Mario Draghi said the cuts in interest rates to a record low may have only a "muted" effect on the euro-area economy as it slides deeper into recession. He also warned about further risks to euro-area growth.
The Bank of England expanded quantitative easing by GBP 50 billion and maintained its record low interest rate.
At the end of two-day rate setting meeting, the Monetary Policy Committee decided to raise the size of its asset purchase programme to GBP 375 billion from GBP 325 billion. The bank maintained its bank rate at 0.50 percent as expected by economists.
Underscoring the global recessionary fears, the International Monetary Fund hinted that it would cut its global growth outlook for this year.
Delivering the Nikkei Symposium Keynote Speech in Tokyo, the IMF Managing Director Lagarde said, "In the IMF's updated assessment of the world economy, to be released ten days from now, the global growth outlook will be somewhat less than we anticipated just three months ago."
In the April World Economic Outlook report, the lender forecast 3.5 percent global economic growth this year and 4.1 percent next year.
The euro moved broadly sideways against the dollar after fetching a 5-week low of 1.2365 on Thursday. The pair just revisited the 1.24 mark at the beginning of the London session but failed to sustain momentum in subsequent trading hours. As of 6:05 am ET, the pair was trading in the lower-end of its recent ranges at 1.2368.
Against the pound, the European currency reached 0.7964 around 5:20 am ET, its lowest mark since May 16. The next near-term support for the euro-pound pair is seen around the 0.7950/55 area.
UK output price inflation eased in June to its lowest level since October 2009, the Office for National Statistics said today. The output price index rose 2.3 percent year-on-year in June, slower than 2.9 percent rise in May. Economists expected prices to rise 2.4 percent.
Month-on-month, the output price index fell 0.4 percent compared with a fall of 0.2 percent in April. This is the largest monthly fall since November 2008, the statistical office said. Economists had forecast a 0.2 percent drop.
The common currency traded in its recent ranges against the Swiss franc, moving between 1.2016 and 1.2011.
Consumer prices in Switzerland decreased at a slightly faster rate in June, and the rate of growth exceeded economists' forecast, data released by the Federal Statistical Office showed today.
The consumer price index declined 1.1 percent on an annual basis in June, slightly faster than the 1 percent fall seen in May. Economists were looking for a 1 percent decrease.
On a monthly basis, consumer prices decreased 0.3 percent in June, slower than the 0.2 percent drop economists were expecting.
The euro moved in a range of 99.13 to 98.74 against the yen in most of today's sessions as the market paid little attention to Japanese Finance Minister Jun Azumi's comments that the government would take appropriate action on yen if the currency gains hurt the economy's recovery.
The government intervened in the currency market last year to stem excess gains in yen. The crisis in Europe has pushed yen higher due to its safe-haven status.
Meanwhile, Reuters new agency quoted Azumi as saying that the government could run out of cash by October. He was making a plea on Friday before the opposition parties for the clearance of the deficit financial bill, which would allow the government to sell bonds to cover the budget gap.


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