News Column

Dollar up ahead of NFP, potential ECB rate cut keeps euro on sidelines

February 6, 2014

The U.S. dollar notched up against major counterparts on Thursday, in particularly against the euro and the pound, as markets eyed the European Central bank (ECB) and Bank of England (BOE)'s policy decisions due later in the day, while investors also await Friday's release of U.S. January nonfarm payrolls data. The dollar index, which tracks the dollar's movements versus a basket of major currencies, steadied on Thursday, trading at 81.19 after falling to a session low of 81.18. Dollar firmed against the yen, where the USDJPY pair was trading up at 101.529 based on the four-hour chart, after opening at 101.520. The pair so far hit a session high of 101.558. Stabilizing above the support level of 101.656 would be positive for the pair. European markets are paying close attention to the U.S. nonfarm payroll report scheduled for release on Friday by the Labor Department , few days after data showed U.S. private sector only added 175,000 jobs in January, the smallest increase since August. Pound to face BoE's rate decision The British pound eased Thursday, before the Bank of England sets interest rates amid speculation about its forward guidance following the surprisingly rapid improvement in the UK's labor market. The country has been staging a strong recovery, with solid economic growth and improving survey data, along with a declining unemployment. However, Gov. Mark Carney said interest rates won't need to rise immediately, even as the unemployment rate falls closer and closer to the bank's 7% threshold. The GBPUSD pair extended losses into the European session, and was last seen at $1.62905 down from an opening of $1.62956 . The pair so far recorded an intraday high of $1.62968 and low at $1.62896 . Showtime for the ECB, Euro Falls Euro moved lower against the dollar on Thursday, ahead of the closely watched monetary policy meeting of the European Central Bank , as concerns over the risk of deflation in the euro area continued to weigh. Based on the four-hour time frame, the euro remained mixed against the dollar, fluctuation between gains and losses, where the EURUSD pair last traded at $1.35261 , after starting the session at $1.35258 . The pair was likely to find support at $1.3476 . Investors remained cautious ahead of the ECB rate decision amid maintaining speculations the ECB could further cut its borrowing costs in order to stave off deflation and shore up the fragile recovery in the region.

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Source: Financial Markets

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