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Friday, 3 Dec 2010
Markets Await Non-Farm Employment Data
With euro-zone debt crisis showing signs of stabilization, at least in the short term, eyes are again turning to the U.S and any economic data publications from the region that might give clues to the pace of the U.S economic recovery. And one of the main economic indicators is the Non-Farm Employment Data, expected to be released at 13:30 GMT. The results of this indicator will likely help set the direction for the EUR/USD pair heading to the end of the year.
USD - USD Declines After Better than Expected Housing Data
The dollar declined against its riskier counterparts Thursday after better than expected U.S Pending Home Sales data release and as gains in stocks and commodities boosted investors' risk appetite. Pending home sales jumped 10% after dropping 1.8% in September.
The dollar depreciated 0.5% to $1.3209 per euro at closing time in New York, from $1.3139 Wednesday. The pair remained mainly flat overnight and is currently trading around $1.3200 level. It touched $1.2969 on Nov. 30, the strongest level since Sept. 15. The greenback weakened 0.4 percent to 83.70 yen, from 84.19 yen.
Today the highly anticipated Non-Farm Employment Data and Unemployment Rate are released at 13:30 GMT. The number is expected to show a slight decline from last month, yet still show that employers added jobs to the economy. The ISM Non-Manufacturing PMI is expected to be released at 15:00 GMT and expected to show a modest increase from the previous month. A result in line with expectations or better will likely boost market optimism further, pushing down the USD versus risker, higher yielding assets.
EUR - EUR Jumps on Possible Bond Purchasing Program
The euro gained versus the dollar and yen Thursday after indications of aggressive bond buying by the European Central Bank. After dropping early Thursday as ECB President Jean-Claude Trichet failed to provide any new support for the region's stressed economies, the euro rallied later in the trading day as speculations arose that the ECB was actually aggressively buying debt. Though not confirmed, the possibility of ECB bond purchases helped ease market sentiment and boosted the euro. The common currency rose above $1.32 after having earlier fallen to $1.3060.
Much better than expected housing data from the U.S helped boost investors' sentiment further, pushing higher yielding currencies such as the euro, the Australian and the New Zealand dollars higher versus the dollar and yen.
Late Thursday, the euro was at $1.3225 from $1.3137 late Wednesday and at 110.95 yen from 110.57 yen. The U.K pound was at $1.5597 from $1.5620.
Today, the release of the euro-zone retail sales numbers at 10:00 GMT is expected to show an increase, possibly giving additional push to the common currency. Traders are also strongly advised to follow the release of the U.S Non-Farm Employment Data and Unemployment Rate are released at 13:30 GMT as this indicator tends to have major effect on the EUR/USD pair.
JPY - Yen Declines as Risk Aversion Eases
The yen continues its decline versus the euro during today's Asian trading hours after dropping Thursday on signs the global economic recovery is picking up which boosting demand for higher-yielding assets. Against the dollar the yen showed gains, despite the release of better than expected economic data from the U.S. After reaching a high of 84.35, the pair declined to currently trade around 83.70 yen. The Japanese currency is currently at 110.49 versus the euro, after reaching a high of 111.19 yesterday.
As for today, traders are advised to follow any news publications from the euro-zone and the U.S, particularly the release of the euro-zone retail sales numbers at 10:00 GMT and the release of the U.S Non-Farm Employment Data and Unemployment Rate are released at 13:30 GMT.
Crude Oil - Crude Jumps to Near $88 a Barrel
Crude futures settled at a two-year high Thursday, jumping to $88 a barrel after better than expected release of U.S housing data. Light, sweet crude for January delivery settled $1.25, or 1.4%, higher on the New York Mercantile Exchange.
The decline in the dollar gave additional boost to the commodity as it is dollar denominated and therefore a weaker dollar makes it cheaper.
Today traders are strongly advised to follow the release of the U.S Non-Farm Employment Data and Unemployment Rate are released at 13:30 GMT as this indicator tends to have major effect on the USD pairs and dollar linked commodities such as crude oil.
The pair seems to be exhibiting some mixed signals; while the hourly chart's Slow Stochastic is showing a bullish cross and the daily charts RSI is floating in the oversold territory, the 4 hour chart's Slow Stochastic is exhaling a bearish cross with the RSI floating in the overbought territory. Waiting on a clear signal for the pair may be advised for today.
The pair has been trading in a tight range between 1.5560 and 1.5610 with most indicators floating in neutral territory. Waiting on a clearer signal for the pair may be advised.
The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.
It seems that the pair's upward correction is likely to continue today as well; a breach of the lower Bollinger Band is evident on the 8 hour chart while the RSI for the pair is floating in the oversold territory on the 2 hour chart. Going long with tight stops may be a good choice for today.
The Wild Card
The RSI for the pair is floating gin the oversold territory on the daily, 8 hour and 2 hour charts while a bullish cross is evident on the daily chart's Slow Stochastic. A breach of the lower Bollinger Band is evident on the daily chart indicating an imminent upward move while a doji candlestick is evident on the 8 hour chart, indicating a reversal in direction might take place. Forex traders are advised to go long for the day.