EUR/USD was little changed this morning as investors were hesitant to move this currency pair ahead of this afternoon’s US employment data.
The euro received a mild lift following a slight increase in the Purchasing Managers Index for services across the euro region while year-on-year retail sales increased by 1.1%. The bias at the moment for EUR/USD is on the upside as European equity markets are higher this morning which suggests investors are willing to take on a bit of risk. However, that could change quickly this afternoon following the release of the US non-farm payroll data. Expectations are for total jobs to decrease by 105,000, primarily due to jobs lost following the US census. The important number to keep an eye on will be the private sector payrolls, which economists have predicted will rise by 40,000. If more jobs are added than forecast this is likely to spur risk appetite and drive EUR/USD higher. It is more difficult to determine what will happen if the jobs data disappoints. On the one hand the US dollar may benefit from its perceived safe-haven status, however, investors could also dump the dollar over real concerns on the health of the US economy and the prospect of an even longer low-interest rate environment.
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