EUROPEAN FX UPDATE: USD a touch higher heading into crucial NFP print

USD: DXY +0.2%; 105.88

• USD is a touch firmer vs. most peers in the run-up to today's NFP print which is expected to pick up to 200k vs. October's weather/strike-impacted 12k. ING suggests that given the expected bounce back from last month, anything below 200k would be considered soft, whilst anything above 300k would seriously question whether the Fed cuts later this month. Univ. of Michigan, Fed’s Bowman, Goolsbee, Hammack & Daly also due on deck. DXY has failed to make its way back onto a 106 handle after falling victim to yesterday's EUR bounce. A strong outturn for NFP would likely embolden longs to reclaim 106.

EUR: EUR/USD -0.1%; 1.0572

• EUR's rally vs. the USD has paused for breath after vaulting from a 1.0508 low yesterday to a 1.0593 peak today. Support yesterday was derived from some relief around the French budget situation with Le Pen optimistic that a 2025 budget can be passed in the coming weeks. Today's EZ docket has seen a soft outturn for German IP data with the nation's slump continuing to persist. Heading into next week's ECB policy announcement, markets price in around 29bps of loosening for the meeting.

JPY: USD/JPY +0.3%; 150.56

• JPY is softer vs. the USD despite some fleeting support from comments by Japan's main Opposition party Chief who said the BoJ should normalise monetary policy, adding it is wrong to focus too much on keeping monetary policy loose when Japan is experiencing inflation. USD/JPY has made its way back onto a 150 handle with a current session peak @ 150.60 vs. yesterday's high @ 150.77. If breached, the 10DMA sits @ 150.99.

GBP: GBP/USD U/C; 1.2578

• GBP flat vs. the USD in quiet UK newsflow asides from comments by BoE's Greene who said UK services inflation has remained stubbornly high, underpinned by wage growth and the supply side of the UK economy is weak. Cable briefly rose above the top end of yesterday's 1.2693-1.2771 range before fading gains. Next week's UK docket sees monthly GDP data but this is unlikely to move the policy trajectory at the BoE.

Antipodeans: AUD/USD -0.4%; 06423. NZD/USD -0.6% 0.5848

• Both softer vs. the USD and at the foot of the G10 leaderboard. For AUD, the latest Reuters poll showed unanimous expectation for the central bank to keep rates on hold at next week's meeting with the first rate cut expected in Q2 2025 vs. the Q1 2025 forecast seen in the November poll. AUD/USD briefly slipped below yesterday's 0.6421. If breached again, the next target is the 0.64 mark with Wednesday's low just below @ 0.6399. NZD/USD is just about holding above yesterday's 0.5848 low. If breached, Wednesday's low sits @ 0.5829.

06 Dec 2024 - 09:50- ForexData- Source: Newsquawk