EUR/USD holds above 1.09, focus turns to US nonfarm payrolls

EUR/USD surged to a one-month high of 1.0980 on Thursday and consolidated gains in Asian trading on Friday.
The euro leapt after the European Central Bank announced its policy changes which fell short of market expectations. Many investors had been hoping for a deeper cut as well as a raised level, not just extension, of its quantitative easing purchases.

The ECB’s decision to opt for QE extension rather than QE expansion reflects the broad signs of improvement in German growth business surveys. Germany’s IFO and various Eurozone PMIs and confidence surveys have hit 17 to 52-month highs.

The dollar remained broadly lower against the other major currencies on Thursday, after measures unveiled by the European Central Bank sent the euro sharply higher and as downbeat US data dampened demand for the greenback. This included ISM data and jobless claims numbers.

The ISM non-manufacturing PMI fell to six-month low of 55.9 last month from 59.1 in October, missing forecasts for a reading of 58.0.

The data came shortly after the initial jobless claims data for the week ending November 28. Claims rose by 9,000 to 269,000 from the previous week’s total of 260,000. Analysts expected jobless claims to rise by 8,000 last week.
Markets now turn to the US nonfarm payrolls, to look for clues as to whether the Federal Reserve will hike rates this month with little reaction to regional data.

Fed Chair Janet Yellen in her testimony on Thursday was generally upbeat, mentioning how the US economy has largely met the criteria the Fed has set for its first rate hike. Unemployment is low, growth continues at a modest pace, and Yellen said she is confident inflation will return to the Fed’s target over time.

In Asian trading, USD/JPY opened the session at 122.60 and traded between 122.47 and 122.84.

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Source:: EUR/USD holds above 1.09, focus turns to US nonfarm payrolls

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