Dollar Pauses Ahead of Jobs Data

 
Snapshot: 

        -Dollar lower; 10-year Treasury yield at 1.85%; Stock futures seen lower; Brent crude lower, gold at $1203.73
        -Watch for: Unemployment Insurance Weekly Claims Report; Weekly export sales; Janet Yellen speech; Bloomberg Consumer Comfort Index; ISM-NY Report on Business; EIA Weekly Natural Gas Storage Report
        News: Iran Nuclear Talks Run Into Eighth Day; Greece Presents More Detailed Bailout Plan; BOJ Survey Shows Steady Inflation Expectations
        The euro climbed against the dollar Thursday, reflecting a pullback in the buck's big rally of 2015 amid patches of weaker-than-expected U.S. economic data.
        The single currency was 0.6% higher in early European trade at $1.0825. Traders said there was no fresh news driving the move, but investors were continuing to digest Wednesday's upbeat manufacturing data from the eurozone, which contrasted with disappointing manufacturing and jobs data in the U.S.
        The recent signs of weakness in the U.S. economy have prompted investors to push back their bets for the first interest rate rise in the U.S., stalling the dollar's gains.
        But a majority of investors are still betting on further gains for the buck. That could leave it vulnerable to another pullback if Friday's nonfarm payroll data disappoint, according to currency strategists at Citigroup.
        "A weak outcome will confirm emerging fears that the first-quarter slowdown was not an aberration," they said.
        The euro remains more than 10% lower against the buck this year. The recent pause in its decline, bouncing back from a 12-year low of $1.05 in March, means there is scope for further declines, strategists at BNP Paribas said.
        U.S. Treasurys retain Wednesday's positive tone and push further ahead as investors pare risk after a weak ADP employment report and ahead of Friday's monthly labour data. The 10-yr U.S. Treasury yields 1.85%, down around 40 bps in the last month, while the June contract is 4/32 higher at 129-160.
        U.S. stocks are expected to open lower ahead of the release of a number of important data figures Thursday.
        With non-farm payrolls scheduled Friday, investors will be keeping a close eye on Thursday's initial weekly jobless claims, which are expected to come in at 285,000 versus 282,000. The figure is one clear sign that the cold weather-induced slowdown in various sectors of the economy won't last. Jobless claims are back at exceedingly low levels, indicating a tight labor market.
        Friday, non-farm payrolls are expected to come in at 247,000 versus 295,000 in February, with unemployment at 5.5% and unchanged from February.
        Economists are looking for the cold snap of the past winter to have finally taken a modest bite out of what has been a strong pattern of jobs growth. If that doesn't happen it will reinforce how strong the labor market is becoming and could even raise the odds of a near-term Fed rate hike if it does, it will likely be dismissed as weather-related anomaly. The thing to watch in all of this is wages. Until now, there has been very little sign that tighter labor market conditions is feeding into higher employee payments.
        "In the past six months or so we've seen the private payrolls reading understate the official payrolls reading. As a result, any sizeable gains in Friday's release could really reignite the greenback," said Stan Shamu at IG.
        Elsewhere, European stock markets were quiet ahead of the continent's four-day weekend, after rallying on Wednesday's strong manufacturing data. The Stoxx Europe 600 was 0.1% lower in early trade.
        Equities in Europe climbed sharply in the first quarter, helped by the European Central Bank's bond-buying stimulus program, a weaker euro, and signs that a tentative economic recovery is taking hold.
        Stocks across Asia rallied despite worries about U.S. economic growth, while China shares took a breather having gained 24% since early February. Japan's Nikkei was up 1.2% after the prior session's 0.9% fall. Hong Kong's Hang Seng was up 0.4%, even as the HSBC Hong Kong purchasing managers' index for March fell to 49.6 after reaching a one-year high of 50.7 in February.
        Oil prices fell, reversing their strong gains in the previous session as investors awaited the outcome of the Iran nuclear negotiations.
        May Brent crude fell 0.4% to $56.90 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures for delivery in May were down 0.2% to $49.96 a barrel
        Gold prices in Europe were very slightly higher, with a weak employment and manufacturing data contributing to speculation that the U.S. Federal Reserve will wait to hike interest rates.
        Spot gold was trading at $1,203.73 a troy ounce, up 0.01%, in morning European trade.
        Iran Nuclear Talks Run Into Eighth Day
        Iranian nuclear talks ran into an eighth day on Thursday as German Foreign Minister Frank-Walter Steinmeier canceled a trip to the Baltics to stay in Switzerland, his office said.
        Greece Presents More Detailed Bailout Plan
        Greece made little headway in negotiations toward ending its standoff with its international creditors, leaving the government facing the prospect of at least another month without new financing and starved for cash.
        BOJ Survey Shows Steady Inflation Expectations
        Japan's inflation expectations remained steady in the three months to March, a Bank of Japan survey showed, an outcome that could reinforce its view that the underlying inflation trend remains in place despite a slide in the consumer price index to zero.
        Obama Unveils New Penalties for Overseas Cyberattacks
        President Barack Obama on Wednesday moved to create a new program of sanctions against other nations and people outside the U.S. who participate in significant cyberattacks against U.S. citizens, companies or government entities.
        French Fin Min: Greek Reform Improved But Can Go Further
        French Finance Minister Michel Sapin said that Greece's pledges for economic overhauls have improved, but still don't go far enough.
        Write to Sarka Halas at sarka.halas@wsj.com
        (END) Dow Jones Newswires

        April 02, 2015 06:13 ET (10:13 GMT)

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