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Forex: US Dollar Outlook Clouded on Conflicting Clues Before Jobs Data

Forex: US Dollar Outlook Clouded on Conflicting Clues Before Jobs Data

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Japanese Yen Falls as Nikkei 225 Rallies on GPIF Portfolio Reallocation
  • US Dollar Gains as Traders Look Ahead to November’s US Jobs Report
  • Leading Economic Data Offers Mixed Clues on US Labor Market Health

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The Japanese Yen fell amid ebbing haven for the safety-linked currency as the Nikkei 225 advanced. The rally followed comments from Takatoshi Ito, chairman of an advisory panel to Japan’s Government Pension Investment Fund. Ito said GPIF should cut its holding of JGBs from 58 to 52 percent of total assets and redirect capital into Japanese equities. The US Dollar rallied against all of its leading counterparts as traders looked ahead to November’s US Employment report.

Economists expect the US economy to have added 185,000 jobs in November, a narrow slowdown compared with October’s 204,000 increase. Yesterday’s supportive Jobless Claims data set and Wednesday’s better-than-expected ADP Employment report have fed speculation about an upside surprise however. Such an outcome stands to boost the greenback as traders price in the probability of a sooner move to “taper” QE asset purchases by the Federal Reserve.

Needless to say, a soft print stands to yield the opposite dynamic. The probability of such a result is not insignificant. Indeed, the Employment sub-index in November’s service-sector ISM report ominously showed the pace of hiring activity slowed to the weakest in six months. The non-manufacturing sector accounts for close to 80 percent of the employed, meaning a downturn there bodes ill for the US labor market as a whole.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

22:30

AUD

AiG Perf. of Construction Index (NOV)

55.2

-

54.4

23:50

JPY

Official Reserve Assets ($) (NOV)

1275.4B

-

1276.8B

5:00

JPY

Coincident Index (OCT P)

109.6

109.8

108.4

5:00

JPY

Leading Index (OCT P)

109.9

109.7

109.2

5:30

AUD

Foreign Reserves (A$) (NOV)

59.9B

-

57.2B

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

8:00

CHF

Foreign Currency Reserves (NOV)

435.7B (A)

434.7B

Low

8:00

GBP

Halifax House Prices (MoM) (NOV)

1.1% (A)

0.7%

Low

8:00

GBP

Halifax House Prices (3M/Y) (NOV)

7.7% (A)

6.9%

Low

8:15

CHF

CPI (MoM) (NOV)

0.0% (A)

-0.1%

Medium

8:15

CHF

CPI (YoY) (NOV)

0.1% (A)

-0.3%

Medium

8:15

CHF

CPI - EU Harmonized (MoM) (NOV)

-0.3% (A)

-0.1%

Low

8:15

CHF

CPI - EU Harmonized (YoY) (NOV)

0.2% (A)

0.0%

Low

9:30

GBP

BoE/GfK Inflation Next 12 Mths (NOV)

-

3.2%

Low

11:00

EUR

German Factory Orders (MoM) (OCT)

-1.0%

3.3%

Medium

11:00

EUR

German Factory Orders (YoY) (OCT)

4.1%

7.9%

Medium

Critical Levels:

CCY

SUPP 3

SUPP 2

SUPP 1

Pivot Point

RES 1

RES 2

RES 3

EURUSD

1.3361

1.3495

1.3581

1.3629

1.3715

1.3763

1.3897

GBPUSD

1.6140

1.6243

1.6288

1.6346

1.6391

1.6449

1.6552

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

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