Currency markets were moving in tight range overnight due to US markets being closed for Independence Day.

Equity trading in Asian hours might be slow due to lower participation while investors wait for the US non-farm payrolls report to be released at 20:30 Singapore time.

Consensus forecast for June non-farm payroll increase is 160k. However, a disappointing private ADP jobs report released earlier this week point to a weaker prospect in the jobs market. While the service sector added 117k new jobs, the manufacturing and construction sector saw modest decline in new roles. This underscores the adverse impact of trade tariffs and slower demand to the US economy.

If tonight’s non-farm payroll report comes in with a big miss, it might catalyse some short-dollar activities as it not only signals weakness in the fundamentals, but will also urge the Fed to take on accommodative monetary policies. On the other hand, if the jobs data beat expectations and is on the upside, the reverse is likely to happen and the dollar may jump.

Treasury yields across the US and west Europe continued to slide, which sent their equities to record highs as risk-free rates dropped across the board. The popular nomination of Christine Lagarde, the formal IMF chairwomen, to succeed Mario Draghi as the new chief of the European Central Bank (ECB) led to higher expectations for further easing measures to combat tepid inflation in the region, in spite of the already-negative interest rates in place.

President Trump’s recent criticism over the EU and China as ‘currency manipulators’ did not set off much wave in the currency market. But he did give the market a clear signal that he favours weaker USD against its major trading partners. This stance, alongside with a dovish Fed, may limit the upside of the US dollar index.

In Singapore, equity markets opened broadly higher despite a pullback in DBS Group. REITs and property developers continue to lead market gain and the industrial sector rebounded modestly. Technically, 3,330-3,390 remains a heavy resistance zone that the benchmark index STI is attempting to pierce through.

US Dollar Index – Sep 2019s

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.