Speculations that US lawmakers will be unable to reach an agreement to boost the nation’s borrowing limit before the government runs out of money in the next two-months, boosted safe-haven assets yesterday. Both the US dollar and Japanese yen saw upward movement as a result against their higher-yielding currency rivals. Today, the main piece of economic news is likely to be the US Non-Farm Payrolls (NFP) report, set to be released at 13:30 GMT. Widely considered the most important indicator on the forex calendar, the NFP report is certain to generate significant market volatility.
Economic News
USD – All Eyes on US Employment Data Today
The US dollar saw gains against most of its main currency rivals yesterday, as attention shifted away from the recent “fiscal cliff” agreement, to the US debt ceiling. Lawmakers now have two month’s to reach an agreement to raise the nation’s borrowing limit before the government runs out of money. Concerns that an agreement will not be reached in time led to risk aversion, which boosted the safe-haven greenback.
The USD/CHF gained close to 50 pips during the European session to eventually trade as high as 0.9241, before a minor downward correction brought the pair to 0.9229. The GBP/USD fell more than 90 pips during the same time period to trade as low as 1.6143 before bouncing back to the 1.6170 level.
Today, all eyes will be on the US Non-Farm Payrolls (NFP) figure, set to be released at 13:30 GMT. Analysts are predicting that US employers added 135K jobs in December, slightly less than November’s final result of 146K. If the indicator comes in below the expected level, safe-haven currencies like the USD and JPY could see bullish movement before markets close for the weekend. Conversely, a better than expected NFP report will likely boost riskier assets, including crude oil, the euro and the AUD.
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