iFOREX Daily Analysis : September 04, 2015

 | Sep 04, 2015 07:03AM ET

The dollar moved higher on Thursday after the release of positive U.S. economic reports and as investors turned their attention Friday's highly-anticipated nonfarm payrolls data. The dollar was supported by the Institute of Supply Management report, showing that its non-manufacturing purchasing manager's index fell 59.0 last month from 60.3 in July, above forecasts for a reading of 58.1. However, the rise in the dollar was limited by the U.S. Department of Labor which reported that the number of individuals filing for initial jobless benefits in the week ending August 29 increased by 12,000 to 282,000 from the previous week’s total of 270,000. Analysts had expected initial jobless claims to rise by 5,000 to 275,000 last week. Initial jobless claims have held below the 300,000-level for 26 consecutive weeks, which is usually associated with a healthy labor market. Data also showed that the U.S. trade deficit narrowed to $41.86 billion in July when analysts had expected the deficit to narrow to $42.4 billion. In the european front, the euro fell broadly after the ECB indicated that it could expand its quantitative easing program while interest rates remained unchanged. For today, Germany is to report on factory orders, Canada is to publish its monthly employment report and the U.S. will beb closing the week with the closely watched nonfarm payrolls report, and data on wage growth.

EUR/USD

The euro fell further against the U.S. dollar on Thursday, trading close to two-week lows, pressured by new indications that the ECB might expand its current quantitative easing measures and after positive ISM manufacturing and trade balance reports from the US. The ECB lowered its forecast for growth and inflation, giving clear signs that an increase in its stimulus measures is possible. The comments came after the ECB kept its benchmark interest rate at a record-low 0.05%, in line with the consensus expectation. ISM non-manufacturing data and trade balance data from the U.S. came out positive, adding further pressure on the pair while unemployment claims were reported worse than expected but still held below 300,000, indicating strength in the labor market. For today, investors are looking ahead to the U.S. jobs report for further indications on the strength of the economy and signs of a potential rate hike by the Federal Reserve this month.