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Monday, 6 Jun 2011
EUR/USD at 1-Month High Following Friday's NFP
With Friday's Non-Farm Payroll (NFP) figure revealing surprise stagnation in the US employment sector, traders appear more reluctant to go into the greenback in order to stave off further losses in their portfolios. The euro zone has so far benefited from this shift as a weaker dollar versus the region's main currency should give Europeans more buying power in the days ahead.
USD - Traders Bearish on USD as Employment Data Hastens Flight to Safety
The US dollar experienced strongly bearish results since last Friday as traders began to shift away from the greenback following the non-farm employment data released that showed a stagnating American economy. The results so far have been for the value of the USD to drop like a stone versus its currency counterparts, and the euro looks poised to capture much of the beneficial side-effects.
With Friday's Non-Farm Payroll (NFP) figure revealing surprise stagnation in the US employment sector, traders appear more reluctant to go into the greenback in order to stave off further losses in their portfolios. The euro zone has so far benefited from this shift as a weaker dollar versus the region's main currency should give Europeans more buying power in the days ahead. The issue of interest rate differentials has generated market tension over the past two weeks and, indeed, the shift in value among the safe-havens and the EUR has made currency forecasting a much more difficult profession.
As for today, traders will focus more attention on Canada given the US economy is not scheduled to publish any significant news or data releases. The Canadian economy will be releasing its latest findings on building permits and its monthly Ivey PMI data. With increased USD aversion since last Friday, traders appear to be anticipating a continuation of the USD's recent bearishness.
EUR - EUR Gains as Investors Turn Gaze to Interest Rate Differentials
The euro rose versus the US dollar this morning, with the pair's price reaching a one-month high near 1.4650. Soft data out of the American economy last week forced a reevaluation by many investors who went long on the USD following the European Central Bank's (ECB) cloudy rate statement from a month back, and several grumblings about Greece's debt woes.
Last Friday's significantly weaker fundamentals out of the American economy were only one part of the story, however. The euro zone's advantageous absence from the market last Thursday, and its low data output Friday, helped the regional currency appear more attractive amid the USD's employment slag.
What little data was published out of the region also showed better growth than was expected. This combination of data from these two economic rivals generated a heightened intrigue in the comparative interest rates as risk sentiment got shifted. The result was for the interest rate bulls to outpace the debt woe bears in yesterday's session, driving the EUR higher versus the USD.
As for today, the euro zone will be publish two less significant data sets, one concerning regional PPI, the other about investor confidence. Most investors are turning their attention on the American economy after last week's dismal NFP reading and there appears to be a good chance that dollar bears will continue to push the EUR higher as the day wears on.
JPY - Japanese Yen Mixed as Investors Examine Global Risk Sentiment
The Japanese yen (JPY) has been trading with largely positive results since Friday as investors turn their focus towards news out of the United States. After a week of ups and downs, the Japanese yen appears set to make gains today as investors largely flee riskier assets. The low interest rates of the Japanese economy have helped pull many investors into the safety of the yen, as opposed to the USD, following Friday's American NFP data release.
The USD/JPY was seen trading somewhat lower this morning, holding steady near 80.20 and moving up towards 80.30 at today's opening Asian sessions. Market news released out of Canada today will likely be the driving force behind forex market values and traders would be wise to watch the Ivey PMI figure scheduled for 15:00 GMT since it has a strong correlation with global economic growth.
Oil - Crude Oil Prices Look to be Consolidating near $100
The price of Crude Oil ended Friday flat as traders largely began to push back into their investments in physical assets while the US dollar made a rapid plummet. The result has been a steady price movement in oil prices these past several days with lows near $98 and highs of $103 a barrel.
Recent events have made speculating about oil prices more difficult. The plummeting value of the US dollar since Friday should have helped lift oil prices, but the commodity steady fall for the fourth consecutive day as of this morning. Rising stockpiles in the United States, reported Thursday, may have helped fuel the shift away from oil as rising inventory tends to suppress price hikes. As for the rest of today, oil prices also appear flat, with technical support targets near $99.50 a barrel possibly coming into view.
The current rally has helped the pair climb above the 61.8% Fibonacci retracement level from the May downtrend at 1.4570. While monthly stochastics are beginning to roll over, both the weekly and the daily stochastics are rising sharply higher. The pair could continue to rise where it may encounter resistance off of the previous trend line from the January to May rally which comes in at 1.4730. This level has further significance as it coincides with the late April/May lows. Further strength would test the May high at 1.4940 while any pullback could find support at 1.4450 from Friday's low, followed by the 50-day moving average at 1.4390.
Sterling is showing a few signs of weakness versus the dollar as daily stochastics are declining and a failed attempt to close the week above the 1.6515 resistance level. A move higher would then test the April high at 1.6745 followed by the 2009 high at 1.0755. To the downside the 20-day moving average may prove to be supportive at 1.6310 as well as the trend line rising from the May 2010 low which comes in at 1.6150. A breach here would expose the May 2011 low at 1.6055.
Yen strength has reemerged and the pair looks to test its post-intervention lows from early May at 79.56. A break of this level exposes the pre-intervention low at 76.11 as the charts are absent of any significant support levels. To the upside, 81.75 should see some resistance followed by the May high at 82.15.
A new week and a new high for the Swiss franc as the USD/CHF traded as low as 0.8326. Falling stochastics on the weekly chart point to further potential declines in the pair. Traders may find opportunities to enter into the downtrend on a pullback in the pair. Support is located at the May low of 0.8550 followed by the falling trend line off of the February high at 0.8770.
The Wild Card
After falling from its May high and retracing 61.8% of the February to May move the pair has risen sharply higher over the past five consecutive trading days. Momentum has shifted to the upside and as such forex traders may want to be long with a target at the May high of 0.9040. Support comes in at 0.8845.
|13:30||CAD||NZD Core Retail Sales||m/m||0.7%||0.2%||-|
|15:00||USD||Existing Home Sales||4.92M||4.99M||-|
|15:00||USD||Fed Chairman Bernanke Testifies||*||*||*|
|15:30||USD||Crude Oil Inventories||-0.6M||-||-|
|19:00||USD||FOMC Meeting Minutes||*||*||*|
|02:00||AUD||MI Inflation Expectations||2.2%||-||-|
|06:00||JPY||BoJ Monthly Report||*||*||*|
|08:00||EUR||French Flash Manufacturing PMI||44.4||44.8||-|
|08:00||EUR||French Flash Services PMI||44.3||44.7||-|
|08:30||EUR||German Flash Manufacturing PMI||48.1||48.9||-|
|08:30||EUR||German Flash Services PMI||49.6||50.2||-|
|09:00||EUR||Flash Manufacturing PMI||46.7||47.1||-|
|09:00||EUR||Flash Services PMI||47.0||47.4||-|
|09:00||EUR||Italian Retail Sales||m/m||-0.2%||0.3%||-|
|09:30||GBP||Prelim Business Investment||q/q||-0.8%||1.7%||-|
|09:30||GBP||Index of Services||q/q||0.1%||0.7%||-|
|09:30||GBP||Second Estimate GDP||q/q||0.3%||0.3%||-|