Euro Tries To Find A Bottom As Market Eyes NFPs
Top Stories
- Fed funds at 10% for 75bp cut at October meeting
- House to vote for second time on the $700 Billion rescue bill chance of passage still uncertain
- Biden Palin square off with little effect
- Estimated job losses in financial industry climb to 64K
- All eyes on NFP global equities lower, but US futures up
- Oil quiet at $94/bbl
- Gold below $850 at $845 after yesterday's collapse
Overnight Eco
- AUDAIG services index 44.9 against 39.3 last month
- CHF CPI 0.1% vs. 0.1%
- EUR final PMI 48.4 vs. 48.2
- GBP services PMI46 vs. 48
Event Risk on Tap
- USD NFP projected at -105K
- USD ISM Non Manufacturing market looks at 50
Price Action
- USD/JPY remains close to 105 as market wary of NFPs
- AUD/USD stages small recovery to 7800
- GBP/USD tries to bounce of 7600 but 7750 caps any rally as services PMI disapoints
- EUR/USD tries to build a bottom at 1.3800 after yesterday's slaughter
Euro Tries to Find a Bottom As Market Eyes NFPs
After another sharp decline in yesterday's North American session that pushed it to new yearly lows, the EUR/USD spent a quiet night of consolidation trying to hold the 1.3800 level as traders prepared for the release of NFPs and the possible passage of the $700 Billion rescue package in House representatives.
Sentiment towards the EUR/USD remains highly negative as markets continue to worry that EZ officials lack any formal mechanism to combat the credit crisis that has spread over to theother side of the Atlantic fromUS.This week-end's 'mini meeting' of G8 called by French President Sarkozy to discuss the creation of $300 Billion super fund much like the $700 US rescue package, holds little promise of success as Germany opposes the measure.The division among European fiscal officials may continue to pressure the EUR/USD next week, but in the near term attention will turn to US NFP report due out at 14:30 GMT
Market expectations are for -105K print but should the NFP s surprise to the downside perhaps even reaching the -200K level, market reaction againstthe greenback may be severe. Already today's Fed funds are implying a 10% chance of a remarkably large 75bp cut of the Fed funds rate at the next meeting on October 29th, and while such a drastic move appears highly unlikely, even a 50bp rate cut by the Fed would reduce the dollar's yield to only 150bp and expand the interest ratedifferential to the euro to a whopping 275bp. Under those conditions some yield seeking bargain hunters are sure to provide some support to the euro and the pair could easily retake the 1.4000 handle as focus shifts from problems in EZ to the slowdown in US
FX Upcoming
| Currency |
GMT |
EST |
Release |
Expected |
Prior |
| USD |
8:30 |
12:30 |
USD Change in Nonfarm Payrolls (SEP) |
-105K |
-84K |
| USD |
10:00 |
14:00 |
USD ISM Non-Manufacturing Composite (SEP) |
50 |
50.6 |
Boris Schlossberg
http://www.gftforex.com
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