USD flows: Focus Shifts to Payrolls

The USD has moved sideways in Europe, with trading thinned due to the U.S. holiday.  The mood is for further consolidation ahead of Friday U.S. employment report, but the mood is to test the USD downside if the data is on the weak side.  Last week move is seen as trimming of USD shorts ahead of a crucial couple of weeks. Traders say a weak U.S. employment report would increase speculation about a 50bps cut on September 18 and hurt the USD, while numbers in line with expectations would likely not produce much FX reaction but would confirm the prospects of a 25bps Fed cut.