Important Week Ahead for FX Traders

The week started on a strong food as the Euro is in strong demand – EUR/USD, EUR/GBP, EUR/CAD or EUR/AUD trade higher when compared with last Friday’s closing. With little or no news over the weekend, dynamics in the Euro pairs reflect the impact of the ECB’s crisis measures – PEPP and TLTRO programs.

However, it is too early to say a trend is in place, as this week is a special one for FX traders for several reasons. First, Tuesday is the last trading day of the month, with flows affecting the FX market, especially during the main fixing times.

Second, this is the Non-Farm Payrolls (NFP) week. While usually the NFP is characterized by low volatility until the release, this time is different as the NFP will be released one day earlier than usual (Thursday instead of Friday). Because of the 4th of July holiday in the United States, the NFP comes out a day after the ADP (private payrolls) on Wednesday, offering a clear picture of the US labor market.

Third, the FOMC Minutes on Wednesday will tell investors what the Fed discussed at the last FOMC Meeting. The interest here is to find an explanation for the recent shrinking in the USD liquidity as the US Treasury debt issuing outpaces the Fed’s money printing programs.

Finally, Thursday’s NFP comes out at the same time as the initial jobless claims and the continuing claims for the past week. As the coronavirus crisis spreads rapidly, traders are focused on finding out as soon as possible what the new economic implications are.

Since the coronavirus health crisis, more and more people apply for unemployment benefits in the United States. The May NFP number was viewed as a huge positive surprise, and all eyes now are on a confirmation that a turnaround in the jobs market is truly in place.

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