Dollar is at Risk of Falling while Japanese Yen Gains on Soft US Payrolls Data

A relatively quiet European economic calendar is likely to see investors focused on January’s US Employment report. Expectations call for a 230,000 increase in nonfarm payrolls, marking a slight deceleration in job creation compared with the 252,000 added in the prior month.

Realized US data has increasingly softened relative to expected outcomes recently, opening the door for downside surprises. Such results may weigh on the US Dollar as traders push back Fed rate hike expectations. It may likewise drive risk aversion amid worries the about the inability of US growth to offset malaise in Europe and Asia, triggering an unwinding of carry trades and boosting the Japanese Yen.

The New Zealand Dollar outperformed in overnight trade against a backdrop of easing RBNZ rate cut expectations. Bets on imminent policy easing have been moderating for the past two days after central bank Governor Graeme Wheeler hinted at а prolonged period of standstill ahead.

The Australian Dollar likewise pushed higher on the back of the quarterly RBA Monetary Policy Statement. While Glenn Stevens and company downgraded their outlook for economic growth, thereby justifying the interest rate cut delivered earlier in the week, they likewise projected inflation in the 2-3 percent range for the year. That puts price growth in line with the RBA’s target, arguing against an aggressive easing cycle in the near term.

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:30	AUD	AiG Perf of Construction Index (JAN)	45.9	-	44.4
23:50	JPY	Official Reserve Assets (JAN)	$1261.1B	-	$1260.5B
00:30	AUD	RBA Statement on Monetary Policy	-	-	-
05:00	JPY	Coincident Index (DEC P)	110.7	110.5	109.2
05:00	JPY	Leading Index (DEC P)	105.2	105.4	103.9
05:30	AUD	Foreign Reserves (JAN)	A$62.5B	-	A$65.7B

European Session

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
7:00	EUR	German Industrial Production (YoY) (DEC)	-0.7% (A)	-0.3%	Medium
7:00	EUR	German Industrial Production (MoM) (DEC)	0.1% (A)	0.1%	Medium
8:00	CHF	Foreign Currency Reserves (JAN)	-	495.1B	Medium
8:15	CHF	Retail Sales (Real) (YoY) (DEC)	-	-1.20%	Low
9:30	GBP	Total Trade Balance (DEC)	-£1700M	-£1406M	Low
9:30	GBP	Visible Trade Balance (DEC)	-£9100M	-£8848M	Low
9:30	GBP	Trade Balance Non EU (DEC)	-£3000M	-£2649M	Low

Critical Levels

CCY	Supp 3	Supp 2	Supp 1	Pivot Point	Res 1	Res 2	Res 3
EURUSD	1.1037	1.1232	1.1354	1.1427	1.1549	1.1622	1.1817
GBPUSD	1.4926	1.5103	1.5216	1.5280	1.5393	1.5457	1.5634