The U.S. Dollar moved broadly higher following Wednesday’s ADP report which showed an unexpectedly better outcome of 238,000 new private sector jobs being added in December, the largest single month’s jump in more than a year. That news has ratcheted up expectations that Friday’s official government report release, the non-farms payrolls, will also bring an upside surprise; the U.S. Federal Reserve’s decision making process focuses heavily on the NFP report and continued improvement in the labor situation will tend to suggest that the Fed’s withdrawal of stimulus measures is also likely to increase in pace as a result, despite Fed minutes which suggested some caution.
As reported at 10:42 a.m. (JST) in Tokyo, the U.S. Dollar Index was trading at a 2-month peak at 81.166 .DXY. The USD/JPY pair traded at 104.82 Yen, edging away from a 1-week peak of 105.135 Yen while the EUR/USD dropped to a 1-month trough at $1.3554. The EUR/GBP hit a 1-year trough at 82.38 Pence, while the EUR/JPY pair also skidded to 142.42 Yen.
ECB Decision in Focus
While the Fed’s possible withdrawal of additional stimulus supports the greenback, and economists believe that the Fed is likely to continue to gradually taper, the Euro is likely to remain under broad pressure, at least until after the ECB policy decision which comes later today. Market players will focus on the press conference which comes after the decision to listen to Mario Draghi’s thoughts on possible deflationary risks to help gauge the Euro’s likely direction.