FXStreet (Barcelona) – According to Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, the USD will has plenty of scope to the upside, and a strong US data print today might be the catalyst, but only after Greek uncertainty clears.
Key Quotes
“We certainly see no reason to believe the data will disappoint today with every piece of labour market data pointing to strength. Our own BTMU NFP model is estimating a payrolls gain of 253K. The consumer confidence data this week is the latest strong data with the ‘jobs plentiful minus jobs hard to get’ rising sharply from -6.6 in May to -4.3 in June – a measure when rising that correlates well with a falling unemployment rate.”
“What we can’t be as sure of is the market reaction. With the Greek referendum on Sunday that might result in ‘Grexit’ fears intensifying on Monday, the appetite for a ‘relative macro’ trade based on diverging monetary policy may not be as strong as usual. The dollar has also advanced over the last 24hrs in part on expectations of a strong report.”
“But another strong report today will certainly set up a high probability of renewed dollar gains once the uncertainty around Greece clears. The Greek uncertainty is resulting in the dollar lagging behind recent movements in rate spreads in favour of the dollar.”
“Our 2-year DXY-weighted yield spread is back at close to the high levels recorded when the DXY index was testing 100.0 in March and April, suggesting plenty of catch-up for the dollar on continued strong US economic data. New highs for the 2-year UST bond yield would be another key supportive event for the dollar. Currently the yield is about 5bps below the December 2014 high but could test that level very soon.”
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