EUROPEAN FX UPDATE: USD eyes NFP, JPY boosted by BoJ source report, GBP unable to recoup lost ground

USD: DXY U/C; 109.15

• USD broadly steady vs. peers after advances in the JPY dragged DXY lower (see JPY section for details). Attention today is on the December US jobs report which is expected to see a slowdown in jobs growth to 160k from 227k and the unemployment rate hold steady at 4.2%. ING views the balance of risks for the USD as "tilted to the upside" as "robust jobs figures could prompt markets to price out a March cut and potentially push the first fully-priced move beyond June". Note, prelim UoM data is also due out today. For now, DXY is tucked within yesterday's 108.94-109.37 range with focus to the upside on the current YTD peak @ 109.57.

EUR: EUR/USD U/C; 1.0302

• EUR flat vs. the USD with fresh EZ-specific drivers on the light side and a 25bps rate cut by the ECB later this month near-enough fully priced by the market. As such, price action for EUR/USD is likely to be dictated by events stateside with NFP due on the data docket. EUR/USD has pivoted around the 1.03 mark in early trade in a 1.0282-1.0311 range with the lower bound of that sitting above the current WTD low @ 1.0273 and the YTD low @ 1.0222.


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  EUR/USD opex: 1.0200 (1.2bln), 1.0225-30 (1.3bln), 1.0240-50 (642mln), 1.0275 (1bln), 1.0300 (2.6bln), 1.0315-25 (3bln), 1.0350 (1.8bln), 1.0400 (2.3bln).

JPY: USD/JPY -0.2%; 157.80

• JPY the best performer across the majors following source reporting via Bloomberg suggesting that the BoJ is still mulling its rate decision for January and is mulling raising its inflation forecasts on account of JPY softening. As it stands, odds of a 25bps hike for the 24th January meeting are seen as a near coin-flip. The source reporting knocked USD/JPY back below the 158 mark with a current session trough @ 157.63 which is just a touch above yesterday's 157.57 base. Broader focus remains on the upside though with the 8th Jan peak @ 158.55, the highest level since July 2024.

GBP: GBP/USD -0.1%; 1.2294

• GBP is unable to launch much of a recovery vs. the USD as traders remain wary over the UK's fiscal position and recent rise in yields. On which, reporting via The Times suggests that UK Chancellor Reeves is planning a significant speech on growth in January and has asked ministers to draft concrete measures to bolster activity and to "cease anti-growth measures"; details remain light at this stage. For now, Cable has stabilised above yesterday's 1.2239 low which was the lowest level since November 2023. With not much on today's UK docket, price action will likely be dictated by fluctuations in UK yields and the US jobs report.

Antipodeans: AUD/USD -0.2%; 0.6180. NZD/USD -0.4%; 0.5578

• Both at the foot of the G10 leaderboard. AUD/USD failed to capitalise on the upside overnight triggered by news that the PBoC is to temporarily halt bond purchases and has returned to a 0.61 handle but is thus far managing to hold above yesterday's 0.6171 base which was the lowest level since October 2022. Similar price action for NZD/USD with the pair returning to a 0.55 handle but holding above yesterday's 0.5572 trough (also the lowest since October 2022).

CAD: USD/CAD +0.1%; 1.4404

• CAD is a touch softer vs. the Greenback in the run up to the Canadian and US labour market reports. On the former, employment change is expected to cool to 25k from 50.5k with the unemployment rate seen rising to 6.9% from 6.8%. ING suggests that and potential impact on CAD "would likely be short-lived" as greater focus lies on the Canadian-US trade war and how it will be shaped by the appointment of a new PM. ING views Carney as more market friendly than Freeland. For now, USD/CAD sits just above the 1.44 mark with focus on the 2024, multi-year peak @ 1.4467.

10 Jan 2025 - 09:50- ForexData- Source: Newsquawk