The EURUSD
pair seems to have broken to the downside out of the upward trending channel it
has been in since towards the end of the first quarter of the year. This
development has motivated chatter on the newswires regarding the possibility
that the Euro could approach parity with the US dollar at some stage in the
not-so-distant future. Technically, this possibility is supported by the occurrence
of the fall in the Euro-dollar pair it experienced in the second half of 2014
and the first quarter of 2015. Then, it went from 1.40 down to 1.05, a move
that amounted to a full 25% reduction. If that were to be repeated this time
round, or anything like it, the result could see the Single Currency at around
0.80 to the US dollar.
Yesterday’s fall was on ADP jobs and
Yellen comments
The fall
that occurred yesterday was all in the New York session, when at the start of
which the ADP private payroll services company jobs report came in slightly
better than expected. This is often (but not always) seen by the markets as a
leading indicator of what the official (and crucially important) Non-Farm
Payrolls report will contain when it comes out tomorrow (Friday).
Then, at her
appearance before the banking regulatory committee of the US House of Representatives,
Janet Yellen, Chair of the Federal Reserve, gave what many believe to be the
best hint yet that core interest rates will finally rise at the December
meeting of the Federal Reserve FOMC. According to the Dow Jones Newswire, she
said that the Fed expects “… the economy will continue to grow at a pace that's
sufficient to generate further improvements in the labour market and to return
inflation to our 2 per cent target over the medium term, and if the incoming
information supports that expectation, then our statement indicates that December
would be a live possibility”, She did add: “But importantly, we've made no
decision about it." However the words quoted were enough to
accelerate the fall that had already started.
The actual
Non Farm Payrolls report tomorrow will be eagerly awaited.
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