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Euro Steady Ahead of NFP, Concerns Linger

Last updated 3/5/2010 5:06 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Top Stories

• German Finance Minister - no cent for Greek bailout
• BOJ may increase QE program
• Asia up 2%, Europe neutral at the open
• OIl at $80.65/bbl
• Gold at $1135/oz

Overnight Eco

• AUD AIG Construction Index 52.8 vs. 57.7
• EUR German Factory Orders n/a
• GBP PPI Input 0.1% v. 0.1%eyed

Event Risk on Tap

• USD Non-Farm Employment Change expected at -39K
• USD Unemployment Rate expected at 9.8%
• USD Average Hourly Earnings expected at 0.2%
• USD Consumer Credit expected at -3.6B

Price Action

• USD/JPY rallies in Asia on QE news but 89.50 capped for now
• AUD/USD trades above .9000 as risk flows help
• GBP/USD 1.5000 holds in morning trade
• EUR/USD struggles with 1.3600 as Greek issues still weigh

A typically quiet pre NFP night of trade with very little event risk on the calendar out of Europe. The UK PPI data was largely in line with expectations while in the Eurozone the focus remained on Greece as the Greek Prime Minister George Papandreou  was scheduled to meet with German Chancellor Angela Merkel.

The Greek fiscal situation remains a cause for concern for investors despite yesterday’s very strong 10 year Greek bond auction because neither Germany nor France have yet committed to any concrete rescue package for Greece. Yesterday, ECB President Jean Claude Trichet did not help   matters by dismissing any role for the IMF and today the German Economics Minister Rainer Bruederie reiterated that Greece can’t expect “one cent from Germany.’ His comments sent the  euro slightly lower, but the single currency found support at the 1.3570 level and was trading back at 1.3600 by mid morning European trade.    

Although, concerns over EZ sovereign debt issue continue to linger, the events of the past 24 hours suggest that the worst of the crisis may be over for now. The successful Greek bond auction and the meaningful  austerity measures implemented by Greek authorities may have pacified the debt markets for the time being. The EUR/USD has repeatedly held support at the 1.3400-1.3600  level and barring any further negative developments on the political front could begin to stage a cautious counter trend rally next week.

Meanwhile in North America focus will shift to the US NFP data with market expectations greatly tempered by the unusual weather conditions in February. US officials have been talking down the data, in a effort to prepare the market for a possible negative read, however the preliminary indicators from the ADP report to the ISM Non Manufacturing employment subcomponent have been relatively robust, suggesting that the NFP print may not be as bad as the market fears. Nevertheless, it is doubtful that US payrolls will turn positive this month  and therefore  the market reaction to today’s report could be limited. Only a print of -100K or  worse would evoke a serious reaction from the currency market and will likely unwind most of the gains made by USD/JPY in the last 24 hours.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.