Euro rises ahead of US nonfarm payrolls data

Euro soars to record high against the dollar

The euro rose against the U.S. dollar on Friday before the release of the awaited non-farm payrolls report, which may support the view the Fed would raise its borrowing cost this year.

As of 09:32 GMT, the EURUSD trade at 1.1260 after opening at 1.1235 on Friday.

Positive factors for the euro:

-German factory orders posted its strongest monthly advance in April, coming in three times higher than analysts’ forecasts.

-German Bundesbank raised its growth forecasts for Germany to 1.7 percent this year and 1.8 percent in 2016, compared to prior projections of 1 percent and 1.6 percent respectively.

-The ECB raised its 2015 inflation forecasts for the eurozone on Wednesday, while CPI for the year ended May climbed to 0.3 percent, better than forecasts.

Negative factors:

-German 10-year bund yields retreated after it soared to a record high on Thursday.

-Greece delayed a debt payment of nearly $339 million due Friday to become the first country to postpone a debt installment to the IMF since the 1980s.

Despite the delay in Greece’s debt payment today, the markets did not panic as the IMF agreed the delay.

“There was an offer already on the table from the IMF, so I think the government chose to accept this offer and repay at the end of the month,” Greece’s economy minister, George Stathakis said.

After the rejection of proposals by creditors by Greek Prime Minister Alexis Tsipras and the delay in the IMF to a one payment of 1.7 billion euros at the end of June, the euro may come under pressure for another month.

Later in the day, Tsipras will address the Greek parliament, yet the main attention will be on the nonfarm payrolls.

The NFP may signal a job creation of 225,000 jobs in May, noting that a better than forecast reading would boost the dollar, as it will support expectations of seeing an interest rate hike in September.

The dollar faced some sell off since the beginning of the week, as many investors chose to remain on hold until seeing the NFP figures.

The IMF added more pressure on the green currency yesterday after it slashed growth prospects for the U.S., while urged the Fed to delay its rate hike decision until 2016.

Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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