Attention turns to the US jobs report today while the Greek drama plays on

While the Greek drama continues to unfold traders’ focus will be divided today between the developments in Greece and the release of the Non-Farm Payrolls report in the US. With the 4th of July holiday falling on a weekend this year, the US will release their most important and market-moving jobs report on a Thursday this time and the report will be closely monitored by everyone as it could be a key turning point.

Taking a moment to go over the latest news from Greece though, after yesterday’s Eurogroup meeting failed to produce any fresh developments it is now clear that any decisions from Greece’s creditors and union partners will need to wait for the results of the referendum on Sunday. We will have more details and analysis on that front in our report tomorrow.

Turning our focus on the US jobs report now, the release of this month’s figures could be very important especially after last month’s report where we saw that the domestic labor market started picking up pace again. The report could sway the Fed towards raising the interest rates as soon as September but we should mention here that this decision will also need to take into account any ramifications the Greek issue has.

To keep it simple, if we see a strong report that encourages investors towards a rate hike from the Fed soon then we should see gains for the Dollar but be careful as we expect these gains to be limited. This is due to the fact that traders will most likely avoid to commit heavily ahead of the weekend and the referendum vote since it is very unlikely that the Fed will push forward for a rate hike in 2 months if for example the stock markets fall 10% on the back of a potential Grexit.

On the other hand, a potentially weaker jobs report could have a bigger impact on the Dollar as traders will look to offload some of their pro-Dollar positions, especially ahead of the risk factor that the Greek issue poses over the next few days. However a weak report would need to have a weaker reading in the unemployment and average hourly earnings components as well as a mere correction to the numbers of added jobs could be considered natural after last month’s surge.

So with the Euro and the Cable having taken a turn for lower levels yesterday and momentum starting to build ahead of the uncertain weekend referendum the stakes are high today. The Euro lost the 1.1100 level over yesterday’s session and the Cable is trying to hold above the 1.5600 support area after the miss in the Manufacturing PMI levels released yesterday. The bias is bearish for both currencies and only a weaker US jobs report would allow them to breathe easier ahead of the weekend.