Intraday Market Thoughts

Previewing Non-Farm Payrolls in Thin Trading

by Patrik Urban
Apr 6, 2012 12:30

FX market is predictably slow; Spanish 10 year yield rising. US labor market data is next. Thursday's Premium Intermarket Insights include EURUSD, EURJPY, AUDUSD, USDCAD, gold, silver and oil as well as key notes on EURUSD’s weekly ranges in the last major losses.

Currencies have been trading within a narrow range as most markets are closed today in observance of Good Friday throughout Asia and Europe. Such conditions are likely to continue until the NY session begins.

Skepticism about Eurozone's outlook resurfaced this week and was fueled further by a weak Spanish bond auction on Wednesday. Spanish 10 year yield continues to rise again and reached levels last seen at the beginning of January. On the positive note, according to MNI calculations, Spain has already reached 46.8% of its 2012 funding needs.

Traders are awaiting the release of March labor data at 8:30 am ET. Non

farm payrolls are expected to print 207K, slightly lower compared to February's 227K. The unemployment rate is seen steady at 8.3% and average hourly earnings are anticipated higher at 0.2% from previous 0.1%.

Wednesday's ADP report showed a decline compared to the previous month but still showed a solid 209K result. Furthermore, February's result was revised higher from 216K to 230K. The four week jobless claims average has been declining and the employment sub index of the ISM manufacturing and non-manufacturing both improved. It therefore seems that a significantly disappointing NFP is unlikely. NFP result in line with or better than the expectations should underpin the buck as the bar for new QE would be raised even higher.

Illiquid markets could see a burst of volatility on the release but are likely to quickly calm down ahead of Easter Monday.

Thursday’s Premium Insights illustrate the glaring differences in EURUSD between Mar 13-14 Post FOMC reaction and this week’s POST FOMC minutes. Also charts on USD Index. EURJPY, AUDUSD, USDCAD and US crude oil are also added. Access to today's Insights: Nonsubscribers pls click here:


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