Forex Trading

The US dollar traded sideways in a narrowing range in overnight hours as the markets consolidated yesterday’s intense swings following the G20 summit in London. Swiss Consumer Prices are on tap overnight, though traders are likely to look past the European data docket to focus on the US Non Farm Payrolls report due late into the session.

Key Overnight Developments

• US Dollar Consolidates Losses After G20 Boosts Risk Appetite
• Australian Service-Sector Sentiment Rebounds From Record Low

Critical Levels



The Euro traded sideways in a choppy range above 1.3425 while the British Pound oscillated in a 70-pip band above 1.47.

Asia Session Highlights



Australia’s AiG Performance of Service Index showed service-sector confidence rebounded to 35.6 in March from a record low at 32.2 in the preceding month. Importantly, the index remained below the boom-bust 50 level, suggesting activity is still shrinking but at a marginally slower pace.

With no substantial data on the economic calendar, the markets consolidated yesterday’s intense swings in overnight trading. The US Dollar traded sideways in a narrowing range having slipped -1.6% against the major currencies as risk appetite surged on seemingly promising news from the G20 summit in London, weighing on the safe-haven asset du jour.

Euro Session: What to Expect



Switzerland’s Consumer Price Index is expected to show that annual inflation has dipped into negative territory for the first time in 5 years to print at -0.1% in the year to March. Although the central bank had previously committed to a very aggressively dovish stance including quantitative easing and currency market intervention, the latter part of the plan may now be off the table considering commitments made at yesterday’s G20 summit in London. A survey of economists conducted by Bloomberg suggests that the economy will shrink -2.5% this year, the most since 1975. The downturn looks certain to weigh on prices further, threatening to foster entrenched expectation of deflation. This threatens to magnify downward pressure on economic growth as consumers and businesses perpetually put off spending and investment to wait for the best possible bargain, sinking the economy into long-term recession.

On balance, price action is likely to look past the European data docket to focus on the US Non Farm Payrolls report due late into the session. Expectations call for the world’s largest consumer market to shed 660k jobs in March, threatening to crush buoyant risk appetite boosted by the lofty promises of G20 leaders, helping the US Dollar higher at the expense of most major currencies.

Written by Ilya Spivak, Currency Analyst
Article Source - US Dollar Consolidates Losses, Looks to Non Farm Payrolls for Direction Cues (Euro Open)