Talking Points:
US Dollar to Rise if Unemployment Rate Drop Stokes Wage Inflation Bets
Aussie Dollar May Fall as Yen Gains if US Jobs Data Fuels Risk Aversion
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All eyes are on the March set of US Employment in the final hours of the trading week. A 248,000 increase in nonfarm payrolls (NFP) is expected. The unemployment rate is seen holding at 5.5 percent, a figure broadly associated with “full employment” (a level such that reducing joblessness further would pressure inflation upward).
Weighing up the possibilities, conflicting cues abound. US economic news-flow has generally underperformed relative to expectations since late December, seemingly warning of disappointment risk. However, the NFP number has been a conspicuous exception, delivering consecutive upside surprises in the double digits since November.
Ultimately, the degree of up/down deviation from forecasts in the net jobs gain figure may prove less significant than the jobless rate reading. A drop below 5.5 percent may drive speculation that building wage-push inflationary pressure will encourage the Federal Reserve to move faster on raising interest rates.
In this scenario, the US Dollar is likely to strengthen against most of its major counterparts. Fears of imminent stimulus withdrawal may likewise fuel risk aversion, boosting the Japanese Yen while weighing on the sentiment-sensitive Australian and New Zealand Dollars.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
1:35
JPY
Markit Japan Services PMI (MAR)
48.4
48.5
1:35
JPY
Markit/JMMA Japan Composite PMI (MAR)
49.4
50.0
1:45
CNY
HSBC China Composite PMI (MAR)
51.8
51.8
1:45
CNY
HSBC China Services PMI (MAR)
52.3
52.0
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
No Data
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.0535
1.0690
1.0785
1.0845
1.0940
1.1000
1.1155
GBPUSD
1.4643
1.4734
1.4781
1.4825
1.4872
1.4916
1.5007
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.
Source: Daily fx
