The immediate focus shifts to the US employment report for May.It frequently provokes a significant response in the foreign exchange market. The median forecast indicates an increase of 88,000. The average of 150k in March and April is open to revisions. Nonetheless, with the appointment of the new Fed chair, the influence on expectations for the June 16-17 FOMC is expected to be limited, which may temper the response to today’s report. That said, the intraday momentum indicators suggest a potential recovery for the dollar as the weekend approaches. The euro maintained its position at the lower end of its recent range beneath $1.1600 and subsequently rebounded to $1.1645 during early North American trading. Following the peak, the euro reverted to trade around $1.1610 during the late session. It traversed the range today. The intraday momentum indicators are stretched, indicating limited upside potential and a risk of a retreat following the release of the US jobs data. There exist options amounting to 1.84 billion euros at an exchange rate of $1.1650, set to expire later today. Last Friday, the euro attained approximately $1.1685, marking its highest point since May 14. This week’s high was established on Monday, just above $1.1670.

The dollar exhibited a sideways trading pattern yesterday, fluctuating within a range of approximately half a yen above JPY159.60. It experienced a consistent increase from approximately JPY159.75 to slightly over JPY160 during the North American morning yesterday, maintaining that level in the later trading sessions. It remains confined within a narrower range today, hovering just below 15 ticks above JPY159.90. Although few seem to have remarked on it, we remain taken aback by the quietude emanating from the US Treasury. When the dollar was slightly lower and the US 10-year premium over JGBs was approximately 30 basis points wider, it conveyed a distinct message to the market. The market is almost entirely factoring in a BOJ hike the day following the conclusion of the FOMC meeting later this month. It appears that the US Treasury’s lack of commentary resembles “damning by faint praise” and arguably has led the market to overlook the unprecedented intervention by the BOJ, continuing to test the JPY160 threshold.

Sterling has remained within last Friday’s trading range of approximately $1.3410 to $1.3485 for the entirety of this week, with the exception of a minor fluctuation of 1/100 of a cent at the beginning of the week. Yesterday afternoon, it neared the lower end of that range, while today it has reached the higher end. The 20-day moving average is positioned just above $1.3450 today. Sterling has not established a position above it in nearly two weeks. Intraday momentum indicators are extended, indicating potential downside risk during the North American session. Sterling settled near $1.3455 last week. It marked the seventh weekly gain in the last eight weeks. The Canadian dollar reached its lowest point in early Europe yesterday and subsequently rebounded during the early hours of North American trading. The US dollar reached CAD1.3925, marking its highest level since April 7. It retraced to nearly CAD1.3880 before buyers reappeared.

The greenback is trading lower and is near session lows ahead of the North American open, with intraday momentum indicators reflecting an oversold condition following the decline observed during late-Asia and early European activity. Initial support is observed around CAD1.3860. For a duration of three weeks, along with a few minor intraday violations, the Australian dollar has maintained a trading range of $0.7100 to $0.7200. It spent yesterday in the lower half of the range. It approached $0.7100 today but has since recovered to $0.7140 in Europe. Respect the price action. Assume the range remains valid until it no longer is. Three-month implied volatility is currently positioned at 8%, marking the lower boundary of this year’s range.