ADP Non-Farm Figure Set to Create Dollar Volatility

The US dollar saw additional gains against riskier currencies like the euro and AUD yesterday, as investors continued to shift their funds to safe-haven assets amid concerns regarding the Spanish banking sector. The EUR/USD fell close to 80 pips during European trading, reaching as low as 1.2406 before staging a very slight upward correction. A worse than expected Australian Retail Sales figure caused the AUD/USD to fall well over 100 pips over the course of the day. After reaching as low as 0.9724, the pair was able to reverse upwards and stabilize around the 0.9740 level. Turning to today, traders will want to pay attention to a batch of US data, including the ADP Non-Farm Employment Change and Prelim GDP figures. The ADP statistic is considered an accurate predictor of Friday's all-important Non-Farm Payrolls figure, and consistently leads to market volatility. A better than expected figure could help the dollar recover some of its recent losses against the JPY. With regards to the Prelim GDP, analysts are forecasting that the figure dropped from last quarter. If true, investors may take it as a sign that the US economic recovery is weakening, which could cause the dollar to fall against its safe-haven currency rivals.

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