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Thursday, 4 Feb 2010
Dollar Gains Ahead of Non Farm Employment Data
The USD was higher against its major counterparts Wednesday, heading toward its highest levels versus the EUR since last summer, following the release of better than expected economic data from the U.S.
USD - The USD Rallies on Better than Expected Economic Data
The USD rallied against its major currency counterparts Wednesday following the release of stronger than expected economic data. The greenback erased overnight losses against the EUR after the release of a better than expected ADP Non Farm Employment report in January while the ISM Non-Manufacturing PMI showed expansion in service sector activity in the world's biggest economy.
The ICE Dollar Index, which tracks the performance of the greenback against a trade-weighted basket of currencies, was at 79.360 from 79.000. the better than expected economic data boosted confidence ahead of the key Non Farm Employment report Friday, renewing expectations that the Federal Reserve will raise interest rates sooner than previously forecast. The EUR/USD was also pressured by revived concerns about the fiscal health of Greece as well as Portugal. The greenback also pushed to a two week high against the Yen.
Markets are now focused on the January Non Farm Payroll Data, due out Friday. The Labor Department is expected to show that the U.S. economy added 20,000 jobs last month, which would be the biggest gain since 2007. Today, the Unemployment Claims are due to be released at 13:30 GMT. This release might prove quite volatile for the USD, particularly if the result contrasts with Friday's expectations.
EUR - Credit Concerns Continue to Pressure the EUR
Renewed Concerns that Greece's fiscal problems will spread to other Euro-Zone nations pressured the EUR Wednesday. There are also concerns regarding Portugal and Spain having fiscal difficulties which are adding to the pressure. Wednesday afternoon in New York, the EUR was at $1.3904 from $1.3965 late Tuesday and at 126.46 Yen from 126.20 Yen. The U.K. Pound slipped to $1.5908 from $1.5984.
The common currency rose higher during the European trading session after the European Union offered a qualified endorsement of Greece's plans to close its budget gap. However, it later slid back to trading around a seven month low against the Dollar as better than expected economic data released during the NY session boosted demand for the Dollar over its riskier counterparts.
Today, both the European Central Bank and Bank of England hold their policy meetings. Traders should pay close attention to the U.K's Asset Purchasing Program and whether U.K. officials decide on continuing purchasing assets to support the economy.
JPY - Yen Gains on Poor Data from Asia
The Japanese Yen gained versus 13 of its 16 major counterparts as reports in today's early trading showed Australian retail sales unexpectedly shrank and New Zealand's jobless rate rose. The Yen rose to 126.21 per EUR from 126.42 yesterday in New York yesterday. It gained 0.6% to 63.53 against New Zealand Dollar, and climbed 0.2 % to 80.16 versus the AUD.
The New Zealand Dollar tumbled against major counterparts following the release of the 4th quarter unemployment rate which showed unemployment in New Zealand increased sharply in the final quarter of 2009, reaching its highest level in more than a decade.
Crude Oil - Crude Prices Decline on Weak Demand
Crude Oil futures ended a two day rally Wednesday as government data showed weak Oil demand. The report showed U.S. crude supplies rose 2.32 million barrels to 329 million last week. Light, sweet crude for March delivery settled 25 cents, or 0.3%, lower at $76.98 a barrel on the New York Mercantile Exchange Wednesday.
Demand seems to remain low, despite months of slow improvement in economic conditions. Prices also declined as the Dollar gained against the EUR after a report showed U.S. companies cut fewer jobs. A stronger Dollar reduces the appeal of commodities as an alternative investment.
Oil's movements for the rest of the week will likely be determined by the Data released from the U.S and Euro-Zone, mainly the Non Farm Employment Data, due to be released Friday.
This pair is giving off moderately strong bullish signals. The 4-hour Stochastic (slow) is showing a fresh bullish cross, indicating an impending upward price movement. The daily RSI also appears to be in the over-sold territory and cascading upward, suggesting strong bullish momentum. Going long on this pair may be a wise move today.
A fresh bullish cross has formed on the 4-hour Stochastic (slow) for this pair. As the price has just touched the lower border of the 4-hour Bollinger Bands, there may also be an indication that it will retrace itself back towards the upper border, indicating bullish pressure on this oft-traded currency. Going long could be a profitable tactic today.
The technical indicators on this pair don't seem to be giving off much indication of direction. However, the pair is range-trading in a bullish channel and has just touched topped a recent peak, suggesting that the price may experience a downturn as it continues floating within this range. Buying on lows and selling on highs within this range may be a good choice for the rest of this week.
This pair has just witnessed a bearish cross form on the 4-hour Stochastic (slow) and may soon move in a downward direction. The daily RSI also has the pair just about to exit the over-bought territory, suggesting downward pressure. Going short on this pair would probably be the best strategy in today's trading.
The Wild Card
It seems as though a new bullish cross has formed on the 4-hour Stochastic (slow) for the price of Gold. This may indicate that an upward price movement is imminent. The daily MACD/OsMA also shows a bullish cross, supporting the notion that upward pressure exists on this commodity at the technical level. Forex traders don't want to miss out on a possible opportunity to make fast profits by jumping in on this predictable price movement in one of the world's most exciting and tradable commodities.
|23:30||USD||FOMC Member Williams Speaks||-||-||-|
|00:30||AUD||AIG Construction Index||53.8||-||-|
|01:01||GBP||BRC Shop Price Index||y/y||-1.4%||-||-|
|02:00||AUD||HIA New Home Sales||m/m||-1.8%||-||-|
|02:01||JPY||Monetary Policy Statement||-||-||-|
|08:00||EUR||German Industrial Production||m/m||0.7%||-||-|
|08:01||JPY||BoJ Press Conference||-||-||-|
|08:45||EUR||French Trade Balance||-3.3B||-||-|
|09:00||CHF||Foreign Currency Reserves||540B||-||-|
|10:30||GBP||Manufacturing Production m/m||m/m||-0.8%||-||-|
|10:31||EUR||German 10-y Bond Auction||0.69|1.2||-||-|
|16:00||GBP||NIESR GDP Estimate||0.5%||-||-|
|16:30||USD||Crude Oil Inventories||4.0M||-||-|
|19:01||USD||10-y Bond Auction||2.24|2.7||-||-|