Currency news - Dollar needs payroll confirmation

Dollar needs payroll confirmation - 06-07-07

A firm employment report will be needed to extend the dollar's correction stronger against the Euro.

The dollar weakened to lows near 1.3660 against the Euro in early Europe on Thursday before stabilising ahead of the key economic events. The dollar pushed to highs near 1.3580 after the US ISM release and settled close to 1.3600 in choppy trading. The dollar was holding just firmer than 1.3600 in early Europe on Friday.

The US ISM index for the services sector rose to 60.7 in June from 59.7 the previous month, the strongest reading sine April 2006. The underlying components were also generally robust over the month which will reinforce optimism over near-term US growth trends after a strong manufacturing reading earlier this week.

The other US data was also generally favourable with the ADP employment increase reported at 150,000 for June while reported layoffs also fell over the month. The ADP data will increase optimism over a solid payroll increase for June in this Friday's data, although the dollar will now be more vulnerable in the event of a weak figure. Expectations over a rate cut will decline further if there is a robust employment report.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

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