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Wednesday, 4 Jun 2008
ADP Nonfarm Employment Change on Tap
Yesterday the USD saw bullish momentum against all of its currency pairs. The USD's value was boosted by Fed Chairman, Bernake's hawkish speech and the better than expected Factory Orders, which were released at 1.1% compared with the 0% forecast. Against the EUR, the USD's positive trend caused the pair to cross the 1.5500 range and trade at around 1.5450 after Bernake's speech.
In Bernake's speech held yesterday at the International Monetary Conference in Barcelona, he mentioned the greenback's negative trend in the Forex market. Bernake rarely speaks about the USD, and yesterday the USD was a big part of his speech. Traders also took notice on his words regarding the inflation being a primary concern and further interest rate cuts being unlikely. The USD's bullish momentum benefited again an hour later as Factory Orders beat out forecasts. The Crude Oil's decline yesterday gave the greenback even more positive momentum.
Today is a huge news day for the USD as the very important ADP Nonfarm Employment Change will be announced as part of a batch of announcements expected topped with another speech by Bernake. The ADP estimate foreshadows the actually Nonfarm Employment Change which will officially be released on Friday. Nonfarm Productivity and the ISM Non-Manufacturing Composite will also be released today and will impact the USD as well. Bernake's speech will end the USD's trading day with volatility, but the main impact should be caused by the ADP Nonfarm Employment Change and ISM Non-Manufacturing Composite that are forecasted to be lower than the previous results and should hurt the USD's recent momentum.
Yesterday the EUR saw mixed trends against its currency pairs and had bearish momentum against the USD following the greenback's strong trading day. The EUR/USD cross was traded at around 1.5431, reaching a weekly low. There were only a couple of news releases from the Euro-Zone and both were not very influential, however ECB president Trichet, held a hawkish speech.
The PPI was released at the exact value forecasted and only 0.1% higher than the previous release. The Revised GDP did beat the forecast by 0.1%, but still was very close to the previous release. Trichet said that policymakers are grappling with a number of significant economic shocks, but these shocks do not change the fact that central banks have to concentrate on controlling inflation. He emphasized the importance of the active role that the central banks have to take in the Euro-Zone.
Looking ahead today, the EUR's volatility will start with a morning speech by Trichet. Important economic news will be released today with the first being the Services PMI, which is forecasted to be unchanged, compared to its previous release. The second announcement will be the Retail Sales, which is expected to rise compared to its previous negative result. Overall the EUR should gain a little bullish momentum and much will depend on Trichet's speech.
The Japanese Yen saw mixed trends versus its currency pairs as each cross was greatly affected by its local news, as the JPY did not offer its own direction. Not to be outdone by his counterparts, BOJ Governor Shirakawa spoke and said that he expects upside risks to the CPI inflation rate. His speech also hinted that the Japanese economy will see limited growth as already expected. The JPY finished the trading day with a lone release of Capital Spending, which strongly beat the forecast and improved compared to the previous reading.
Today is expected to be a quiet news day from Japan as there are no releases expected. The Yen's trends will be affected by its currency pairs' rallies. As it seems like both the USD and EUR are expecting much volatility today, their crosses with the JPY will see that same volatility caused by them today. Traders should keep a close look on the news coming from the US and Euro-Zone as both will be the deciding factors in the Yen's movement.
There has been a very sharp drop in EUR/USD price and the very strong support level of 1.5500 was violently breached. The 4 hour chart is showing fresh bearish momentum and all oscillators are showing that there is still much more room to run. Going short might be a good choice today.
The daily chart is showing a very distinct bearish channel, as the cable now floats in the middle of it. The momentum is strong and the next target price is 1.9500. Going short on a position trade might be the smart choice today, as the channel quite wide and a test of the bottom area is imminent.
The range trading continues, as the pair shows no distinct price direction. The daily oscillators are floating in neutral territory and are showing no clear signal on any direction. Forex traders are advised to stay out of this one today, at least until a clear signal is accepted
There has been a sharp bullish break through the very important resistance level of 1.0400 and the pair now consolidates around that area. The daily oscillators are lining up in a fresh bullish notion and it appears that going long might be the right choice today.
The Wild Card
There is a very distinct flag forming on the 4 hour chart, as Oil now approaches the tip of it. The momentum is very bearish and it appears that a breach is quite imminent. Forex traders have a great opportunity to join the bearish trend before the key break occurs and enjoy very high potential on that entry.
|10:00||EUR||Italian Monthly Unemployment Rate||12.3%||12.4%||12.6%|
|11:00||EUR||CPI Flash Estimate||y/y||0.3%||0.4%||0.4%|
|11:00||EUR||Italian Prelim CPI||m/m||-0.3%||-0.1%||0.1%|
|13:30||USD||Core PCE Price Index||m/m||0.1%||0.1%||-|
|13:30||USD||Employment Cost Index||m/m||0.7%||0.6%||-|
|14:55||USD||Revised UoM Consumer Sentiment||86.4||86.4||-|
|14:55||USD||Revised UoM Inflation Expectations||2.8%||-||-|