Bank of Tokyo-Mitsubishi - "EUR/USD is barely holding above 1.3000. The dynamics have changed in the FX market and the change bodes well for the US dollar. However, the ECB decision tomorrow when we expect rates to be left unchanged should limit EUR/USD downside risk for now.
We believe one of the key factors for the dollar performing well is the open-ended nature of QE3 and its linkage to incoming economic data that has been better than data elsewhere. With that in mind, the ADP employment report is important. The 6-mth average in H2 2012 for ADP jobs growth was 145k while the 3-mth average is now up to 184k and with the initial claims data close to a cyclical low, there is every reason to be optimistic that the jobs data today and Friday will bring further good news that helps reduce QE3 expectations and support the dollar."