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Dollar, Yen May Rise on Disappointing US Employment Data

By , Currency Strategist
05 October 2012 06:58 GMT

The US Dollar and Japanese Yen appear likely to rise on haven demand as leading indicators warn Septembers Nonfarm Payrolls print may disappoint.

Talking Points

  • FX Markets Consolidate Overnight as Traders Wait for US Jobs Report
  • Dollar, Yen to Rise on Haven Flows if Payrolls Fall Short of Expectations

The US Dollar consolidated in narrow ranges against the majors overnight as traders waited for US Employment figures to cross the wires. Expectations point to 115,000 increase in payrolls in September, marking a slight improvement following the previous month’s disappointing 96,000 gain. A slowdown in service-sector hiring revealed in September’s ISM data opens the door for a disappointment. On the other hand, yesterday’s jobs data from ADP points to a pickup, although that gauge has tended to overstate jobs gains since February so its forecasting potential seems suspect.

Economists’ forecasts continue to point toward a narrow acceleration in US economic growth compared with a slowdown in Asia and outright recession in the Europe this year. That means investors are likely looking to North America for an offset of headwinds elsewhere. With that in mind, a soft payrolls print is likely to weigh on risk appetite, rebooting haven demand for the US Dollar and driving the currency higher against most of its top counterparts. The Japanese Yen represents a lone exception, with USDJPY likely to decline following a disappointing outcome. Needless to say, a better-than-expected reading stands to produce the opposite results.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:30

AUD

AiG Performance of Construction Index (SEP)

30.9

-

32.2

3:14

JPY

Bank of Japan Rate Decision (OCT 5)

0.10%

0.10%

0.10%

5:00

JPY

Coincident Index (AUG P)

93.6

93.6

93.8

5:00

JPY

Leading Index (AUG P)

93.6

93.5

93.0

6:30

JPY

BOJ Governor Shirakawa Press Conference

-

-

-

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:00

CHF

Foreign Currency Reserves (SEP)

-

420.8B

Low

8:00

CHF

KOF Institute October Economic Forecasts

-

-

Medium

10:00

EUR

German Factory Orders s.a. (MoM) (AUG)

-0.5%

0.5%

Medium

10:00

EUR

German Factory Orders n.s.a. (YoY) (AUG)

-4.3%

-4.5%

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2936

1.3066

GBPUSD

1.6109

1.6238

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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05 October 2012 06:58 GMT