EUR/USD Wrap Up and Pre-NFP Analysis

Two reports from a very high profile U.S. consulting firm helped put pressure on the euro during today’s sessions. One report said the SNB cannot sustain intervention in EUR/CHF as it has been doing. The second report said conditions are sufficiently dire in the euro money markets that the ECB may renew its 1-year long-term refinance operations, which expires next month, that was responsible for pumping over EUR 440 billion into the market last June. The ECB announced months ago that its was ending its LTRO funding operations but has been forced to reinstate both the three and six month refinance operations when the sovereign debt crisis intensified last month.

New fears also arose over Hungary becoming the next Greece which also helped further undermine euro as EU resources would be further strained. They’re not a member of the euro but anything that drains strained EU resources is not a good thing in this environment.

The failure to maintain levels above 1.23 and the top three points just mentioned help summarize why EUR/USD came back under heavy pressure today.  We fell as low as 1.2152 and ended the NY session very close to the lows. Protection of China’s 1.2100 barriers is expected from about the 1.2110 area and central bank bids can’t be ruled out after a wave of selling from the usual suspects around the 1.2320 level in London this morning.

Looking ahead for tomorrow’s big NFP report, Goldman has raised their non-farm payrolls estimate to 600,000. On the downside, they see private payrolls growing a below-consensus 150,000. The market expects 190,000 private hires and a 513,000 rise overall. Apparently whisper numbers are ramping even higher. CNBC reports talk of payrolls 700,000 tomorrow. Whisper numbers of 700,000+ were heard all afternoon, most of them census jobs. As I just stated, Goldman sees 600,000 but only 150,000 private sector jobs and that’s the number you want to focus on for tomorrow! The consensus if for 513k including census workers, 191k for private sector jobs. Overall, the US data so far this week has been solid, but it no longer appears to be accelerating so look for a whipsaw reaction if the private sector comes in anywhere near current estimates. Good luck to you all!