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Friday, 6 Jan 2012
EUR Tumbles Ahead of Non-Farm Data
The euro saw heavy bearish movement throughout the day yesterday despite positive US data which typically helps the currency. Euro-zone debt worries continue to send investors away from riskier assets. Whether today's US Non-Farm Payrolls can give the euro a boost to close out the week is still unknown.
USD - Positive US Jobs Report Turns USD Bullish
The US dollar had a very bullish day yesterday, following a better than expected ADP Non-Farm Payrolls figure and Unemployment Claims report. Gains were made against the euro, British pound and Japanese yen. The EUR/USD fell to an 11-month low, while the USD/JPY shot up past the 77.00 level.
The ADP figure came in at 325K, well above the forecasted 176K. The ADP report is known as an important predictor of today's Non-Farm Payrolls (NFP) figure. The NFP is widely considered the most important global economic indicator, and typically generates heavy market movements.
The NFP will measure the number of non-farm jobs added to US payrolls during the month of December. Analysts are predicting the number to come in at around 152K, which if true, would signal a sizeable increase over November's figure.
The effect the NFP has on the markets has proven to be difficult to predict. On the one hand, a positive number tends to benefit riskier currencies like the EUR, GBP and AUD. On the other hand, should the figure come in below expectations, investors may decide to shift their funds toward safe-haven assets like the USD and JPY. Traders will also want to remember that the NFP number is very difficult to predict and it is not unheard of for the end result to come in well above or below original forecasts.
EUR - Euro-Zone News Sends EUR Tumbling
The euro extended its bearish trend on Thursday, as the euro-zone debt crisis continues to drive investors away from the currency and toward safer assets like the US dollar and Japanese yen. The EUR/JPY hit a fresh 11-year low while the EUR/USD dropped to its lowest level since December 2010. The bearish movement came in despite positive US jobs data which typically benefit riskier assets like the euro.
Today, traders will want to focus on the all-important US Non-Farm Payrolls figure, set to be released at 13:30 GMT. While a positive figure is expected, traders should not count on it helping the euro close out the week on a positive note. Any further negative news out of the euro-zone will likely cause the euro to drop further, especially against currencies like the greenback and yen.
JPY - Yen Tumbles Against USD Following US Jobs Report
The Japanese yen saw a very mixed trading session on Thursday. Against the euro, the JPY hit an 11-year high, largely due to the on-going string of negative news regarding the euro-zone debt crisis. At the same time, positive US jobs data sent the USD/JPY soaring above the 77.00 level.
Today, the Non-Farm Payrolls figure is likely to cause heavy volatility among yen pairs. A positive figure may cause the JPY to slip against some of the riskier currencies like the aussie or British pound. Should today's news come in below expectations, traders can expect the safe-haven yen to receive a healthy boost against all of its main currency rivals.
Crude Oil - Crude Oil Sees Small Drop but Remains Bullish Overall
It appears that the price of crude oil peaked yesterday right around the $103.60 a barrel level before dipping in evening trading. That being said, the price of oil is still extremely high and analysts are forecasting the commodity to remain above the $100 level as long as tensions in the Middle East continue.
Today, traders can expect the current oil trend to continue following the recent EU embargo on Iranian crude oil. Furthermore, should the US Non-Farm Payrolls figure come in as predicted, crude oil is likely to see a boost along with other commodities to close out the week.
Technical indicators are showing that the pair may see an upward correction in the near future. The Williams Percent Range on the 8-hour chart has dropped into the oversold zone, while the RSI on the daily chart has dipped below the 30 level. Traders may want to go long in their positions.
The 8-hour chart's William Percent Range recently dropped below the -80 level, indicating that possible upward movement could occur. That being said, other technical indicators are inconclusive at the moment. Traders may want to take a wait and see approach for this pair.
Most technical indicators are showing this pair in the oversold region. The Stochastic Slow on the daily chart has formed a bullish cross while the Relative Strength Index is hovering around the oversold zone. Traders may want to go long in their positions.
The daily chart's technical indicators are showing that this pair is in the overbought region and may see a bearish correction. The Williams Percent Range is currently above the -10 level, while the Relative Strength Index is at the 70 level. Traders may want to go short in their positions.
The Wild Card
The 8-hour chart's Stochastic Slow has formed a bearish cross, while the Williams Percent Range on the daily chart is currently right around the -10 level. These are both signs that downward movement could occur in the near future. Forex traders may want to go short before the downward breach takes place.
|08:00||EUR||German Retail Sales||m/m||2.5%||-0.8%||-3.2%|
|08:45||EUR||French Consumer Spending||m/m||0.7%||-0.3%||-0.8%|
|10:00||EUR||Italian Monthly Unemployment Rate||12.3%||12.4%||-|
|11:00||EUR||CPI Flash Estimate||y/y||0.3%||0.4%||-|
|11:00||EUR||Italian Prelim CPI||m/m||-0.3%||-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%||-||-|