Will the US ADP data affect USD dominance

Yesterday the USD took a break from being the dominant currency of late and let the majors gain back some ground.  It seems to have been short lived as in the last few hours the USD has woken up and is taking charge, with gains against most majors so far.  Most notably against its favourite the JPY, which was helped along from the BoJ’s Kuroda saying he sets no limits in the BoJ campaign to spur inflation, causing an 80 point rally so far in USD/JPY, currently trading at 114.40.

Today’s data for the US is likely to have an impact on the move, with ADP employment figures expected to be at 214k from a previous 213k; a closely watched figure giving hints to how the non-farm payrolls will look on Friday.

The JPY has its monetary policy meeting minutes released overnight and it could have an impact on the continuing weakness of the yen.

The pound has had a large fall in the start to trading against the USD rally we are having.  Currently trading at 1.5950, and falling 70 points in the last few hours of trading. There’s not much in the way of information about the instant fall, but with the services PMI set to be released – and looking at an expected slight drop to 58.5- it seems the market is preparing for a weak figure.

The euro is under the same pressure as the other currencies but has held up just above the 1.2500 level, with a host of PMIs from member states to be released, and then the euro area final PMI set to be the same as last at 52.4.

More importantly, the retails sales will be released for the euro area, expected to be at a very weak -0.6% from a previous 1.2%, and this will continue the USD on its path.

Overnight it is worth watching for the Aussie unemployment data expected to stay at 6.1%. But the employment change for the previous month is expected to gain to 10.3k from a -29.7k, which could give the Aussie a lift in the Asian session.

EUR/USD

Supports  1.2470 1.2440 1.2390   | Resistance 1.2540 1.2585 1.2610

USD/JPY

Supports 114.20 113.70 113.25   | Resistance 114.60 114.80 115.00

GBP/USD

Supports 1.5940 1.5920 1.5875  | Resistance 1.5985 1.6025 1.6045