EUR/USD trades steadily ahead of US non-farm payrolls data

The euro was steady against the US dollar on Friday, as investors awaited the release of a report on US non-farm payrolls.

Having reached a session high at 1.3620 at 06:25 GMT, EUR/USD traded little changed at 1.3603 at 09:09 GMT, losing 0.04% for the day. Support was likely to be received at January 9th low, 1.3549, also the pairs lowest since December 5th, while resistance was to be met at January 9th high, 1.3633.

Today, a report by the US Labor Department may reveal employers added more jobs in 2013 than in the past eight years. According to the median analysts’ forecast, US employers hired 197 000 workers last month, down from 203 000 in November, but this would bring a total of 2.27 million workers for last year, the most since 2005.

On January 8th, a report by the ADP research institute showed the US private sector added 238 000 workers in December, the most since November 2012, defying analysts’ projections of a decrease to 200 000 from 215 000 workers in November. The ADP report is calculated according to the same methods the Bureau of Labor Statistics uses and is published every month, two days before the official BLS employment rate statistics.

The Federal Reserve Bank said on December 18th that it will reduce its monthly bond purchases in January to $75 billion from $85 billion, citing improvements in the labor market. Yesterday, Fed minutes of the December meeting revealed decreasing economic benefits from the bond-buying program, which increased bets that Fed policy makers might extend reductions in their monetary stimulus program in the near future.

The dollar was supported by a recent series of upbeat US economic data.

On Tuesday, the US Commerce Department reported that the US trade deficit narrowed to $34.25 billion in November, defying analysts’ projections that the trade deficit will widen to $40.00 billion. In October the US trade deficit was downwardly revised from $40.64 to $39.33 billion.

Data showed that the US imports declined 1.4% to $229.1 billion, while exports rose 0.9% to a record high $194.9 billion.

On Thursday, the US Labor department reported the initial jobless claims for the week ended January 4th decreased to 330 000 from 345 000 in the previous week. Analysts had expected the number of people who file for unemployment benefits will decrease to 335 000 people.

According to the median estimate of economists surveyed by Bloomberg on December 19th, the Federal Reserve may reduce the purchases in $10 billion increments over the next seven meetings, before ending the program, which tends to devalue the US dollar, in December 2014.

Meanwhile, the euro was pressured yesterday, following Mario Draghi’s comments that inflation expectations are well-anchored and inflation may remain low for a prolonged period of time. The ECB President reiterated that the central bank will maintain its accommodative monetary policy, with interest rates remaining at current or even lower levels for a long period of time. He also reminded that the ECB has a wide range of instruments, which have not been used so far.

On Tuesday, official data showed the annual rate of inflation in the euro zone slowed to 0.8% in December, after 0.9% in November, which boosted concerns over the threat of deflation in the common currency area.

The European Central Bank announced a widely expected decision to keep interest rates unchanged at 0.25%. The central bank also kept the deposit facility rate unchanged at zero and the marginal lending rate at 0.75%.

Elsewhere, AUD/USD reached a daily low at 0.8876 at 1:05 GMT, after which consolidation followed at 0.8898, dipping a mere 0.01% for the day. Support was likely to be found at January 9th low, 0.8866, while resistance was to be encountered at January 8th high, 0.8952. The weekly drop of the pair was 0.5%. Australian dollar has depreciated 16% during the past 12 months against the greenback.