Euro Weakens Ahead Of U.S. Employment Report
June 04 2021 - 2:02AM
RTTF2
The euro declined against its major counterparts in the European
session on Friday, as risk sentiment dampened ahead of U.S. nonfarm
payrolls data for May, which could give clues about the recovery of
the labor market and the future path of monetary policy.
Economists are projecting a job growth of 650,000 in May,
compared to an increase of 266,000 jobs in April. The jobless rate
is expected to fall to 5.9 percent from 6.1 percent in the previous
month.
Strong U.S. data released overnight signaled a faster economic
recovery and the possibility of an early tapering of QE by the U.S.
Federal Reserve.
The data sparked a rally in the dollar, further weighing on the
European currency.
Survey results from IHS Markit showed that Germany's
construction sector contracted further in May largely due to the
supply chain bottlenecks.
The construction Purchasing Managers' Index fell to 44.5 in May
from 46.2 in the previous month. This was the lowest reading since
February, when the sector was impacted by a bout of severe wintry
weather.
The euro dropped to a 3-week low of 1.2104 against the greenback
and an 8-day low of 133.38 against the yen, off its early highs of
1.2132 and 133.82, respectively. Next likely support for the euro
is seen around 1.18 against the greenback and 129.00 against the
yen.
The euro pulled back to 1.0952 against the franc, from a high of
1.0966 seen at 4 am ET. On the downside, 1.06 is possibly seen as
its next support level.
The euro reversed from its early highs of 1.5843 against the
aussie and 1.6990 against the kiwi, edging lower to 1.5791 and
1.6918, respectively. If the euro slides further, it may find
support around 1.54 against the aussie and 1.66 against the
kiwi.
The euro hit 0.8571 against the pound, its lowest level since
May 12. The euro is seen locating support around the 0.84 area.
In contrast, the euro recovered from more than a 2-week low of
1.4666 against the kiwi and was trading at 1.4695. The euro is
likely to test resistance around the 1.50 level.
Looking ahead, U.S. and Canadian jobs data and Canada Ivey PMI,
all for May, as well as U.S. factory orders for April will be out
in the New York session.
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