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EUR/USD Is Anticipating Fourth Weekly Gains Above 1.0900 Despite US Dollar's Rebound Advance Of US NFP
After a varied daily performance and a recent retracement, the EUR/USD trades higher as traders await the key US employment data.Positive German data contrast with negative US statistics to support a bullish Euro bias. Recession concerns and pre-data apprehension combine holiday-induced inertia to stimulate traders. For a fresh impulse, the only game in town is the US employment report; volatility is anticipated.
The EUR/USD bulls maintain control around 1.0920, despite a recent retreat, as it reflects the typical Good Friday inactivity and apprehension ahead of the US Nonfarm Payrolls (NFP) report during the early hours of the day. The major currency pair was volatile on Thursday due to the initial US Dollar rebound on recession concerns, but ended the day unchanged as disappointing US data contrasted with stronger Eurozone data.
Fears of a recession in the world's largest economy were sparked by consecutive lackluster US data and declining US Treasury bond yields, allowing USD bears to take a respite early Thursday. However, another disappointing US employment report reversed the dollar's subsequent gains as traders prepared for the all-important NFP.
In spite of this, US Initial Jobless Claims for the week ending March 31 increased to 228K from 200K expected and an upwardly revised 246K the previous week. Notable is that the Challenger Job Cuts for the given month increased from 77,77K to 89,703K.
Notably, Reuters stoked concerns of a recession by citing the latest decline in Federal Reserve (Fed) Chairman Jerome Powell's preferred bond market indicator. According to research conducted by the Federal Reserve, the "near-term forward spread" contrasting the forward rate on Treasury bills 18 months from now to the current yield on a three-month Treasury bill is the most reliable bond market indicator of an imminent economic contraction.
According to Reuters, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated in prepared remarks on Thursday that the global economy is expected to grow by less than 3% in 2023, down from 3.4% in 2022.
In other news, Germany's Industrial Production (IP) rose 0.6% YoY in February, compared to market predictions of -2.7% and previous readings of -1.7%. The monthly figures also exceeded expectations by 0.1%, coming in at 2.0% versus 3.7% previously. On Wednesday, Germany Factory Orders for February improved to -5.7% YoY from -12.0% revised down previously and -10.5% market expectations, while MoM growth came in at 4.8% versus 0.3% expected and 0.5% previous readings.
Wall Street and US Treasury bond yields both reduce weekly losses in response to these strategies, but investors remain unconvinced.
Moving on and off in the main markets can keep the EUR/USD inactive and susceptible to sharp movements in the context of less liquidity surrounding the March US employment report. Notable is the fact that the recent dovish Fed wagers and disappointing US data give rise to expectations for a positive surprise and massive price volatility afterwards.
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