[Pimpllus]

EUR
Current - 1.4020

There has been little change with respect to the EUR to start week although we have tested both ends of the range we were anticipating with EUR reaching a high of 1.4152 overnight after touching a low of 1.3980 yesterday morning in the NY session. Outside of a slight dip occurred last Thursday when there was uncertainty over the results of the FOMC meeting, the EUR/USD has traded between a 1.3955-1.4150 range.

Overnight, it was odd that the ECB repo didn’t hurt the EUR; rates in Euroland are going lower thanks to last week’s 400bn EUR 1Y and the 100bn O/N today makes it seem like Europe has plenty of cash. The liquidity measures have artificially suppressed EUR rates by 50bps (policy rate is at 1.00% but the market rate is trading much closer to 0.50%). We may be having a delayed reaction to the news as the US dollar has staged a rally with the interest rate differentials moving in the US dollar's favor over the past 24hrs.

The major drivers this week will be tomorrow's ISM release and Thursday's Nonfarm Payroll figure and ECB. No one seems willing to put much "risk" to work ahead of these releases. Some think the ISM and ECB will be US dollar positive (probably slightly better ISM report and ECB will be jawboning the EUR lower) but the real risk is for a much worse than expected Nonfarm Payrolls.