It was another session of tight ranges today in Asia. The EUR/USD opened around 1.2695, touched 1.2699 early and then slipped to a session low at 1.2677, as the USD climbed against the JPY. The pairing subsequently moved back to 1.2685 on EUR/JPY demand, as shorts square into the long weekend in Tokyo, uncomfortable to hold JPY longs with North Korea threatening a nuclear test. The JPY is leading the USD in Asia and the EUR tends to follow, or be the victim of cross flow. Dealers report small bids at 1.2660/70, stops below 1.2650 and light selling interest above 1.2700. Further tight range trading is expected to extend into the U.S. payroll data.
The median forecast for the payrolls data is a rise of 123,000, but there is some speculation that the risk is for a lower figure, after the monthly ADP report released on Wednesday suggested a figure of 95,000. The EUR/USD has been in a tight 1.2663/1.2765 range this week, while option volatility is close to historical lows. A figure around expectations ahead of the long weekend in the U.S. and Japan will produce a very quiet start to next week.
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