As the June European Central Bank policy meeting looms, the pressure on the Euro continues to be relentless with markets bracing for some form of easing. Indeed, for the week ended on May 27th according to the CFTC which regulates such events, short future positions on the Euro increased from 9,220 to 16,6300, a clear indication that expectations are very high. It is the opinion of experts recently polled that the meeting which is to be concluded on June 5th, is likely to result in a number of policy options which may include interest rate cuts across the board, even into negative territory in the case of overnight deposit rates. Markets are also wary that the ECB might surprise, but if no surprise is forthcoming, there could be Euro profit taking cautiously occurring.
As reported at 11:08 a.m. (JST) in Tokyo, the EUR/USD traded lower at $1.3627, holding close to last Thursday’s low of $1.3586, a 3-month trough. The U.S. Dollar Index, which includes the Euro as one of its weighted rivals, gained about 0.1% to trade at 80.413 .DXY and is close to Wednesday’s peak of 80.581 .DXY which could be broken soon if the pressure on the Euro continues. The USD/JPY edged up 0.1% to trade at 101.92 Yen.
Further Outlook to NFP
Markets will also be keenly watching for the outcome of this week’s non-farms payrolls report which is due out on Friday. Investors are expecting that the numbers will show another increase with labor levels sustained, an indication that the U.S. economic recovery is proceeding.