Major currency pairs were close to important round levels. The outcome of the "bulls" and "bears" struggles for these psychological marks will depend on the market reaction to the report on the American labor market for January.
According to forecasts last month, the US employment will by 160 thousand, while unemployment would remain unchanged at the level of 3.5%. The growth of the average hourly wage was supposed to increase by 0.3% in monthly terms and by 3.0% in annual terms.
Leading indicators give inconsistent signals
The ADP report reflected an increase in employment of 291 thousand in January, which was the highest figure for 12 months. The University of Michigan Consumer Confidence Index rose to 99.8 points, approaching multi-year highs.
The four-week average value of initial applications for unemployment benefits over the past month decreased from 224 thousand to 211 thousand, although the number of repeated applications in January remained unchanged.
ISM reports came out mixed, stating that the employment index component of the production index increased from 45.2 points to 46.6 points, while the service sector index fell from 54.8 points to 53.1 points.
The Challenger report turned out to be rather weak as it reflected an increase in the number of layoffs by 67 thousand.
A report by the US Bureau of Labor Statistics JOLTS showed a decrease in open vacancies from 7.36 million to 6.8 million in November.
The dollar remains positive in anticipation of the publication of an important release
This suggests that the greenback does not need much to continue to grow. Indicators above forecasts may lead to its further strengthening, especially against European currencies.
American statistics continue to please the eye, and German manufacturing orders for three months, including December, fell by 0.5%. This makes one doubt that the eurozone economy will be able to rise from its knees in the near future. Fed Vice President Randal Quarles believes that there is no need to lower the federal funds rate yet. At the same time, ECB Chairman Christine Lagarde notes that unexpected external risks hinder the process of economic recovery in the currency bloc. Divergence in the growth rates of the American and European GDP, as well as in the monetary policy of the Fed and the ECB allows the EUR / USD bears to feel confident.
The main currency pair fell below 1.1000, from where it received customer support since November. For this time, we will know after the release of Friday's release on the US labor market.
If the indicators do not reach forecasts, then EUR / USD will be able to return above 1.1000, while strong statistics will send the pair to 1.0940 and 1.0915.
The pound is far from in good shape just like the euro. Concerns that the United Kingdom and the European Union will not be able to close the deal before the end of the year put pressure on the British currency. The pound usually does not respond to US data, so only a very strong NFP report will trigger a GBP / USD reaction.
Meanwhile, the USD / JPY pair can react quite strongly to the NFP report. Recently, it has been growing along with US stock indices and Treasury yields. A positive report on the US labor market will accelerate the growth of these assets, and the pair may rise above the January maximum at 110.28.
The AUD / USD pair, on the other hand, was squeezed between a rock and a hard place, which is a rally of Wall Street indices and demand for the US dollar. Key support is located at the level of a multi-year low near 0.6670, and its breakdown will accelerate the fall of the pair.
Thus, if the data on the American labor market is weaker than forecasts, this will be a good excuse to take profits. However, strong pressure on the dollar is possible only if employment is less than 100 thousand.
