Dollar Rises Ahead Of U.S. Jobs Data, Greek Referendum Weighs On Euro

The dollar firmed after Wednesday’s strong ADP employment change and ISM Manufacturing data, which both came in above estimates. The ADP employment change showed the biggest jobs gain since December and points to a strong set of jobs data in today’s batch of June employment figures.

Asian shares continued to brush aside worries over Greece with Japan’s Nikkei heading for a third day of gains. Markets in China appeared unimpressed by moves from China’s securities regulator to ease collateral rules on margin rules as a measure to counter the recent heavy losses on the stock markets. The Shanghai and Shenzhen stock exchanges were quick to react by cutting their transaction fees but this didn’t prevent shares from plummeting by over 3% in late trading.

Confusion reigned over Greece’s negotiating efforts with its creditors. The euro was boosted by developments earlier in the day on news that the Greek prime minister Alexis Tsipras had agreed to most of the terms of the bailout proposals put forward last Friday by the EU/IMF. The indications were that Greece would scrap plans for Sunday’s referendum if the creditors agreed to the minor tweaks in the bailout terms. But the prime minister later made a defiant appearance on Greek television to rally the Greek public to vote “No” in Sunday’s referendum after the Eurogroup ruled out resumption of negotiations until after the referendum.

The euro managed to hold onto the 1.10 handle and was slightly higher at 1.1068 against the dollar in late Asian session. It was able to make stronger gains against the pound after weaker-than-expected UK manufacturing PMI put pressure on sterling. The euro climbed to 0.7095 against sterling and was also higher against the yen at 136.62.

The dollar continued its 2-day advance against the yen, rising to 123.38 and it also rose sharply against the aussie and the kiwi. Worse-than-expected trade balance figures for May put pressure on the aussie after the trade deficit fell to AUD 2.7 billion instead of the expected AUD 2.2 billion. The kiwi was also hurt, falling to a fresh 5-year low after dairy prices continued to decline in June. The aussie fell to 0.7623 against the greenback in late Asian trading, while the kiwi dropped to 0.6684.

The Canadian dollar and the pound also lost out against the US dollar. Weak oil prices weighed on the loonie on a quiet day with markets closed for Canada Day and warnings by the Bank of England governor on the possible effects on financial markets if Greece was to exit the euro weakened cable. The pound was barely holding on to the 1.56 level in late Asian session and the greenback was testing the 1.26 handle against the loonie, trading just under it at 1.2592.

The main data to watch out for later in the data will be the UK construction PMI for June, which is expected show a monthly improvement, and the US jobs data. The change in US nonfarm payrolls is forecast to slow to 233,000 in June, while the unemployment rate should fall to 5.4%.