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Friday, 7 Jan 2011
NFP Expected to Reveal Strong Growth; Will USD Continue Bullishness?
The publication of the Non-Farm Payroll (NFP) data from the US at 13:30 GMT today is without a doubt the leading publication on the economic calendar. If this highly impactful employment report comes in line with Wednesday's ADP figures, the USD could continue its current bullish run through the middle of next week.
USD - Will December Non-Farm Payrolls Boost the USD?
The US dollar continued its bullish surge yesterday following up from Wednesday's leap. Automatic Data Processing Inc. (ADP) published their monthly report on private sector employment change throughout the month of December showing a better-than-forecast growth in the American employment sector. The result was a strong upward movement in the greenback.
The EUR/USD dropped from 1.3433 to below 1.3000 for the first time since November 30th, representing a 3.2% shift in price over the past two days. The USD/JPY also changed direction, bouncing off the 81.00 price mark on January 2nd, climbing above 83.20 in today's trading and looking to move higher following today's NFP report.
The publication of the Non-Farm Payrolls data from the US at 13:30 GMT today is without a doubt the leading publication on the economic calendar. Should this highly impactful employment report come in line with Wednesday's ADP figures, the USD could continue its current bullish run through the middle of next week.
EUR - EUR Bearish, Regional Reports May Add Strength in Short-Term
The euro has experienced steady bearish behavior against most of its currency counterparts over the past several trading days. Against the US dollar, the 17-nation currency fell over 3.2%, hitting below 1.3000 for the first time since late-November. Against the British pound, the euro dropped from a recent high of 0.8647 to a current price of 0.8414.
The American economy's employment figures, while representing the most impactful data for the day, will not be the sole reports released from global economies. Europe is scheduled to release a series of economic reports also focusing on employment as well as regional trade deficits and retail sales.
On tap for today from the euro zone are the German and French trade balance figures, the unemployment rate from Italy specifically and the region generally, as well as the euro zone's final GDP. Markets will most likely resist heavy volatility prior to the release of the US NFP data, but the EUR could see some bullish corrections if these reports show movement towards growth.
JPY - JPY Mixed as EUR and USD Drive Market Volatility
The mixed results of the Japanese yen over the past several trading days shows a currency being driven by external factors. The yen has fallen significantly against the US dollar and British pound over the last few days, but has gained moderately versus the euro.
As a safe-haven currency, the JPY tends to find support when markets are weakened. The recent strength in the USD from Wednesday's ADP employment figures has allowed the dollar to outpace the yen in short-term trading. Europe's continued weakness explains the JPY's persistent rise against that regional currency. With no economic reports expected out of Japan today, traders will want to pay attention to the US NFP data as this will likely drive today's volatility.
Crude Oil - Crude Oil Looks to Continue Bearish Correction
The price for a barrel of Crude Oil has begun a modest decline since January 3rd. The resurgent US dollar helps explain much of this bearish behavior. However, technical indicators also suggest that oil was anticipating a bearish correction to its latest surge regardless of USD values.
Should the greenback continue its bullish run after the publication of Non-Farm Payrolls (NFP) at 13:30 GMT today, Crude Oil prices will most likely remain in a bullish corrective pattern through the middle of next week.
If European data shows a continued slow-down in growth with today's publication of German industrial production and regional GDP, the price of Crude Oil will find additional resistance as fundamentals harken towards a decline in demand. Unless today's NFP data surprises with negative figures, traders should anticipate a bearish price of oil through the remainder of this week's trading.
Indicators on this pair appear to be showing a bearish tendency. The daily chart's signals show neutrality, but with most oscillators pointing down. It appears the latest bearish movement still has room to run; meaning traders may want to hold their short positions for a bit longer today.
Most oscillators on this pair show the price floating in neutral territory. However, the daily and weekly RSI and Stochastic (slow) indicators each point in a downward direction, suggesting bearish momentum. Traders may want to open short-term sell positions with tight stops today.
The strong bullish movement over the past few trading days has finally pushed a number of indicators into corrective territory. The daily Stochastic (slow) shows an imminent bearish cross, suggesting the possibility of a correction today if the price continues above the 83.75 price level.
The strong rebound this pair underwent over the last few days does not appear to have pushed indicators into corrective territory. Most signals show continued bullishness on the horizon. A swing in price appears far off and traders may want to hold onto their long positions on this pair.
The Wild Card
This pair appears to be reaching a bottoming-out price. Falling consistently for months, this pair now appears poised for a strong reversal with a number of indicators showing potential bullishness just up ahead. The fresh bullish cross on the weekly Stochastic (slow) illustrates this notion rather well and forex traders may want to heed this signal by taking profit on their short positions in preparation for the swing.
|01:01||GBP||RICS House Price Balance||53%||54%||-|
|01:50||JPY||Core Machinery Orders||m/m||-3.6%||3.3%||-|
|05:45||JPY||30-y Bond Auction||1.41|3.1||-||-|
|07:00||JPY||BoJ Monthly Report||-||-||-|
|07:00||JPY||Economy Watchers Sentiment||49.3||48.6||-|
|08:00||EUR||German Trade Balance||22.8B||20.2B||-|
|13:00||GBP||MPC Official Bank Rate Votes||1-0-8||1-0-8||-|
|13:00||GBP||Monetary Policy Statement||-||-||-|
|13:00||GBP||Official Bank Rate||0.50%||0.50%||-|
|13:00||GBP||Asset Purchase Facility||375B||375B||-|
|13:00||GBP||MPC Asset Purchase Facility Votes||0-0-9||0-0-9||-|
|13:30||EUR||ECB Monthly Bulletin||-||-||-|
|16:30||USD||Natural Gas Storage||98B||101B||-|
|19:01||USD||30-y Bond Auction||2.98|2.5||-||-|