Published on 06.01.2023 12:36

The Euro is trading in negative territory against the US dollar as we enter today’s European trading session and there is bound to be plenty of action in the currency pair as market participants await key economic news from both sides of the Atlantic.

We have already seen the release of retail sales figures from Germany which hit the market at -     5.9 which was well below analysts’ expectations for a figure of -2.5 but the traders have by and large overlooked these numbers as they focus on the more important news.

Later on from the Eurozone, we will see the release of consumer confidence figures as well as the all-important Core Harmonized Index of Consumer Prices which is the main indicator regarding inflation in the Euro block. This release in particular will be closely monitored by the European Central Bank as they ponder the size of the next interest rate they will deliver.

The most important news of the day will be from the US with the release of the non-farm payrolls figure and after yesterday’s bumper ADP Employment Change which came in at 235,000 against a prediction of 150,000, many in the market are now expecting a strong NFP reading.

Should this occur, it will all but guarantee the US Federal Reserve will continue to hike interest rates which will only widen the yield gap between the Euro and dollar and see the former nursing further losses as we head into the weekend.

"We are particularly focused on the NFP print where we sit appreciably above consensus for a strong number. That may be enough to shift short-term USD dynamics biased to trade on its front foot," says a daily currency research briefing from analysts at TD Securities.


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