Caution Ahead for Dollar Bulls as NFP Looms

With financial markets in the U.S. closed today for the Independence Day holiday, the U.S. Dollar held steady in overnight Asian trade after investors cut back their long positions ahead of Friday’s market moving data release, namely the monthly non-farms payroll report. Markets are also awaiting monetary policy decisions from both the European Central Bank and the Bank of England, so cautiousness prevails. Mario Draghi, the ECB head, is expected to caution investors that the loose monetary policy in place is likely to remain in place for sometime as downside risks to growth are still abundant. The new head of the Bank of England, Mark Carney, is also unlikely to stray from existing policy but market watchers believe he may make a personal statement following the policy decision announcement, nonetheless.

Trading is expected to be relatively lackluster today, and as reported at 11:27 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.3010, moving up from a session low of $1.2921. The USD/JPY pair also edged higher to 99.97 Yen, off the session trough of 99.30 Yen while the EUR/JPY pair moved away from the session low of 128.60 Yen to 130.11 Yen. The GBP/USD pair moved steadily higher to trade at $1.5276, a gain of more than 100 pips and among the best movers in the Asian session.