Traders are focusing on the US labour department report, which will offer a good indication of how strong the US economy is. Traditionally dealers focus on the non-farm payrolls headline figure which tells us how many new jobs were created that month, but attention has now shifted towards the unemployment rate due to Ben Bernanke’s comments that the stimulus package will stay in place until US unemployment drops to 6%. Any sign that the US jobs market is improving could therefore lead the Federal Reserve to reduce its quantitative easing programme. If the unemployment rate falls more than expected, we could see dealers sell the euro and buy the US dollar.
The euro is still suffering from Mario Draghi’s comments yesterday, when the head of the European Central Bank stated that eurozone interest rates will remain ultra-low for the foreseeable future, and that there is even the possibility of reducing interest rates further.
Weaker-than-expected factory orders from Germany also weighed on the euro this morning, as traders feared it could be a sign of further slowing growth for the eurozone's major economy.