Euro Gains as Investors Start Positioning for U.S. Payrolls

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Written by
Stefania Spezzati
Written by

Stefania Spezzati

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(Bloomberg) -- The euro rose for a second day this week as investors kept trimming long-dollar positions ahead of U.S. payrolls data on Friday.

The shared currency rose as much as 0.6 percent to $1.1868, the highest since January 2015. The move is expected to be capped by orders to sell ahead of 1.1870, according to a trader in Europe who asked not to be identified because the person isn't allowed to speak publicly. Traders across Europe report lighter flows amid summer holidays. On charts, the next resistance is at 1.1871, the high on Jan. 12, 2015.

For Bank of America Merrill Lynch, the dollar remains “short of friends” with hedge funds returning to sell the currency, though there is still room for a bounce. Most clients have been net dollar sellers for much of the year and the currency lost support from corporate investors in July, Athanasios Vamvakidis, its head of G-10 currency strategy, said in a report to clients.

For Deutsche Bank AG, investors are focusing on carry trades until at least the Federal Reserve's Jackson Hole gathering on Aug. 24-26. Chatter on the U.S. debt ceiling also continues with some saying the Trump administration will struggle to build a consensus around raising of it ahead of October, strategists including Jim Reid said in a note to clients.

EUR/USD +0.4 percent to 1.1845; next resistance at 1.1871, Jan. 12 2015 high, and then 1.1897, Jan. 7 2015 high; support at 1.1785, Aug. 1 low
- Credit Agricole SA said investors are potentially already feeling the squeeze ahead of non-farm payrolls data later in the week, strategist Manuel Oliveri said in a note to clients
- Any dollar rebound attempt following a firmer ADP employment survey, which is due on Wednesday, is likely to remain short-lived and at the most might trigger some moderate profit-taking, strategists at UniCredit SpA said in a note to clients
Sterling moves 0.3 percent higher at $1.3239 ahead of the Bank of England's rate announcement on Thursday; market is pricing a rate increase by end-2017 at less than 50 percent
- Morgan Stanley recommended buying sterling against the Swiss franc as it sees three out of eight rate setters favoring tighter policy
- New Zealand's dollar tumbles 0.6 percent, leading G-10 losses against the dollar, after second quarter employment unexpectedly fell for the first time since 2015