Euro in reverse, dollar supported ahead of payrolls

SYDNEY (BestGrowthStock) – The euro was on the defensive on Friday, as a short squeeze in the single currency appeared to have run in course, with investors fretting about debt-laden Greece and Moody’s cutting Deutsche Bank’s ratings.

Traders said market was likely to stay cautious, steering clear of higher-yielding currencies, ahead of key U.S. payrolls data. Forecasts are for a cut of 50,000 jobs, though most say that would have been influenced by bad weather..

“Weather is really the X-factor there and the data could throw up anything,” said Jonathan Cavenagh, currency strategist at Westpac.

“The market is bearish on the numbers, so any upside surprise could actually lift the U.S. dollar. Also, Greece worries continue and with investors still cautious about risk, I would have a bias toward the U.S. dollar ahead of the payrolls data.”

The dollar index (Read more about the global trade. ) (.DXY: ) was higher at 80.58, with near-term resistance seen around 81.30, this week’s high.

The dollar also rose on the yen, inching up to 89.15 yen from around 89.07 yen late on Thursday in New York. Traders

cited a report that the Bank of Japan was weighing further easing measures, heading into April, for the dollar’s move up against the yen.

The euro was down at $1.3572, from $1.3589 late in New York on Thursday when it lost 0.8 percent. It had risen above $1.37 following a robust response to a Greek debt auction on Thursday.

But if fell after the chief of the European Central Bank (ECB), Jean-Claude Trichet, said recovery in Europe would be uneven, squashing any outside chances of a near-term rise in record low euro zone interest rates.

The ECB, as expected, kept rates unchanged on Thursday, but took a small step in unwinding some its extraordinary support for the economy.

Investors also fretted whether Greece’s fresh plans to address its debt woes would win wider support in the European Union ahead of a meeting of German Chancellor Angela Merkel with the Greek prime minister later on Friday.

Greece announced plans on Wednesday for a further $6.5 billion in public sector pay cuts and tax hikes to whittle its budget deficit.

Adding to the woes in the euro zone was Moody’s decision to downgrade Deutsche Bank’s ratings.

The single currency has lost nearly 10 percent since November last year when sovereign debt problems surrounding Greece and other peripheral economies in the euro zone emerged. Speculators have sold heavily since then and latest data show they are running record short positions against the euro.

Sterling was also weaker, falling to $1.5020 from $1.5035 late on Thursday, undermined by growing economic and political worries. It had bounced earlier on Thursday after the Bank of England kept rates unchanged and held back on more quantitative easing.

Stock Report

(Reporting by Anirban Nag; Editing by Wayne Cole)

Euro in reverse, dollar supported ahead of payrolls