USD traded on low levels in major pairs in relation with low volatility and unsatisfactory US GDP. Non Farm Payroll (NFP) data estimation is not good.

Hopes among forex traders that volatility will picks up this week apparently will be dashed. USD traded on low levels in major pairs in relation with low volatility and unsatisfactory US GDP last week. Non Farm Payroll (NFP) data release is predicted not to be able to revoke previous volatility.

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US NFP Estimation Varied

US Dollar this morning diversed with tendency to weaken. Furthermore, it is not expected to improve in the next few days. Analyst estimates for NFP that will be relied upon to improve volatility, tend to vary. May NFP that was released in June placed NFP on 217k. For June NFP, consensus quoted by Reuters mentioned possible improvement to 250k, while Bloomberg survey only reached 211k, and Westpac is similarly pessimistic with 160k predicted.

Kathy Lien from BK Asset Management mentioned that The problem is that the recovery is too slow and unless payrolls rises by 300k or more for 2 straight months, the Fed will stick to their plans to keep interest rates low for an extended period of time. On the other hand, she predicted that Dollar sell-off will be limited because tapering is still ongoing. Further, she considers it means that there is possibility for EURUSD to test 1.3677 and USDJPY to slide towards 100.75.

 

Quiet Holiday?

Meanwhile, John Kicklighter from DailyFX pointed out that US Independence Day on Friday could mean that there will not be any jump on volatility this week. US job market report that includes the NFP usually published in the first Friday of the month. However, 4th of July that fall in Friday shifted the date to Thursday, July 3. In normal situation, the many fundamental releases in a week might provoke market volatility. However, the market is still bound by low rate, and many people in America usually takes extended leave around the holiday. Therefore, it will be quite hard for Thursday unemployment report to move the market. US Dollar in long term might have a relatively good outlook, but it is not in the near future.

On the other hand, Euro, Yen, and GBP also suffer significant pressures. Eurozone data are largely stagnant, supporting market decision to wait and see for the next releases. The fall of Tankan survey result pushed the Yen lower, but the ongoing geopolitical tensions limits any pressures on the currency. Poundsterling fell last week on the Bank of England unexpected dovish sentiment and find it difficult to go back up.

Risks are piling up for main major pairs. Therefore, for the time being, commodity currencies apparently will defend its reign on the market. AUD has shown significant increases this morning on good Chinese Manufacturing PMI and RBA decision. NZD too is still taking advantage of the carry trade trend. The lack of news from the area means that AUD and NZD might gain the upper hand from unsatisfactory data releases this week.