Greenback Gains Ground Ahead of NFP Report - 2.8.2013

The US dollar on Thursday and early on Friday gained against the most of its peers due to ISM Manufacturing PMI released at 55.4, stronger than forecasts at 52.1 and surprisingly better Jobless Claims. The FED decided not to touch on asset purchases program giving a dovish tone on its statement on Wednesday but there is an extra focus now on economic data until next meeting. Early signs indicate that macros are going to be nicely improved. Next major release is for US Non-Farm Employment for July expected to increase by 184K. The US dollar index after finding support at 81.38 climbed back to previous resistance at 82.12 and breached that during US session rising as high as 82.43, ahead of the NFP the index is more likely to remain unchanged.

The Japanese Yen was losing amid risk appetite boosted by data with the USDJPY surging to resistance at 99.70. Japanese equity index, NIKKEI 225 advanced by 2.79% and we would expect the USDJPY to continue higher but in case of weaker than expected NFP we could see a sudden drop in risk sentiment. Nonetheless, early indications of job sector, stronger ADP report and improved ISM Employment Index from 48.7 in June to 54.4 in July, allows expecting an upbeat employment NFP report. The latter could further underpin risk appetite and greenback pushing higher the USDJPY.

The ECB and BOE decided yesterday to maintain their monetary policies unchanged with ECB stressing out low inflation concerns and BOE delaying decisions until Inflation report is out which will be accompanied by monetary forward guidance. On recent trading the European currencies were both losing against the greenback due to lately released stronger data for the US economy. The GBPUSD dropped to 1.5102 from 1.5402 that was trading early this week losing more than 1.90%, the EURUSD dipped by 1.13% in the last two days from 1.3341 to 1.3190. Predictions are risky ahead of NFP outcome, although we favor jobs data would strengthen due to early positive indicators.