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Friday, 8 Jan 2010
Non-Farm Employment Change to Invigorate Today's Market
On tap today is the ever-important US Non-Farm Employment Change (NFP) report due at 13:30 GMT. This is one of the most important economic events on the calendar and is always released on the first Friday of a new month. Should the NFP report provide positive results, there is a good chance the USD may indeed go bullish and break through a number of significant barriers.
USD - Dollar Range-Trading in Anticipation of Non-Farm Payrolls
This entire week we've witnessed the USD fluctuate in a steady range against most of its rivals. The EURUSD pair has hit peaks around 1.4475, with troughs as low as 1.4270. The GBPUSD pair has seen similar behavior, but within a moderately sloped bearish channel, and trading at 1.5933 as of this morning. The USDJPY has seen a steady bullish channel, but doubts remain over how much stronger the USD will get versus many of these currencies.
On tap today is the ever-important US Non-Farm Employment Change (NFP) report due at 13:30 GMT. This is one of the most important economic events on the calendar and is always released on the first Friday of a new month. Being the first month of a new year makes this release even more significant due to the psychological importance of this time of year for many investors.
Should the NFP report provide positive results, there is a good chance the USD may indeed go bullish and break through a number of significant barriers. However, if the report shows that unemployment in the US has gotten worse, we may see some minor downward corrections in the greenback. Downward targets for a negative report include possibly breaking the 1.4460 barrier on the EURUSD, and the potential exists for the GBPUSD to break out of its bearish channel in the short-term.
EUR - EUR Patiently Awaits US Employment Reports
The EUR should be in the backseat of today's market with the vastly important employment reports coming out of the United States and Canada. Nevertheless, the EUR is going to be on the receiving end of these reports, whether positive or otherwise. With the recent range-trading activity of the USD pairs and crosses, the EUR seems to be awaiting the results of today's releases as well since no clear direction currently exists.
Against the greenback, the EUR has dropped from yesterday's high of 1.4446 to as low as 1.4315 in today's early morning hours. Against the British Pound, the 16-nation currency has flattened out somewhat and currently sits near 89.80 pence. The EUR does, however, continue to remain inside its bullish channel versus the Japanese yen, with a price currently sitting just over 133.50.
While the American NFP report is definitely the largest event of the day, the EUR may also see some early price action with the release of a number of British reports concerning producer prices and consumer inflation levels, as well as the general unemployment rate in the Euro-Zone. The opening of these markets, as well as these somewhat less valuable releases, we should see some pricing-in of the day's levels, but the real market movement will come directly after the release of US Non-Farm Employment Change.
JPY - Yen Bearish after Finance Minister Comments
The Japanese Yen appears to be remaining within its bearish channels against most of its currency rivals. Japan typically desires a weaker currency as this helps boost its exports, but the strength the JPY has gained over the past year has put much financial strain on the island economy. Comments made by Japanese Finance Minister Naoto Kan also caused many speculators to short the yen after he declared a desire for a weaker JPY, and expressed a willingness to work with the Bank of Japan to achieve a more suitable exchange rate.
Rebuking his finance minister after such comments, Japanese Prime Minister Yukio Hatoyama stressed that government ministers should not comment on the foreign exchange market, and that stable currency values are strongly desired by Japan. For today, however, the market is likely to receive the most movement following the release of US Non-Farm Payroll data at 13:30 GMT, but traders should be aware of the negative speculative sentiment surrounding the Japanese currency as this will have an impact on its value as the week comes to a close.
Crude Oil - Oil Price back Under $83 a Barrel
Despite the strong and steady uptrend in the value of Crude Oil, the price of this valuable commodity appeared to show a sign of weakening in yesterday's trading. After spiking above $83 a barrel on Wednesday evening, the price proceeded to fall back below this price level and currently trades near $82.30 as of this morning. Crude oil market analysts have long been stating the lack of fundamental data behind oil's recent climb, but prices continue to be propped up by speculation of a soon-to-be falling US Dollar.
Upon closer examination, on the other hand, the price of Crude Oil may have recently entered what technical analysts call a short-term consolidation trend. After rushing upwards above $83, the price then experienced tightening waves which seem to suggest that a violent price movement is on the way, and it wouldn't be too far off to assume that this movement is going to happen around the release of the US Non-Farm Payroll data at 13:30 GMT. Since this will be the driver behind the value of the greenback, oil traders may be waiting to see what happens in forex before going further in commodities.
The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is a fresh bullish cross forming on the 4-hour chart's Slow Stochastic indicating a bullish correction might take place in the nearest future. Going long might be a wise choice.
The typical range trading on the hourly chart continues. The 4-hour chart RSI is floating in neutral territory. However, there is an impending bullish cross forming on the daily chart's MACD indicating a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.
The price of this pair appears to be floating in the over-bought territory on the 4-hour chart's RSI indicating a downward correction may be imminent. The downward direction on the weekly chart Slow Stochastic also supports this notion. Going short might be a wise choice.
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. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.
The Wild Card
Oil prices rose significantly in the last two weeks and peaked at $82.30 per barrel. However, daily charts' RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.
|00:00||JPY||Monetary Policy Statement||-||-||-|
|00:00||JPY||BoJ Press Conference||-||-||-|
|00:30||JPY||Tokyo Core CPI||y/y||2.6%||2.5%||-|
|00:30||JPY||National Core CPI||y/y||3.1%||3.0%||-|
|01:05||GBP||GfK Consumer Confidence||-1||0||-|
|01:30||AUD||Private Sector Credit||m/m||0.4%||0.4%||-|
|07:00||JPY||BoJ Outlook Report||-||-||-|
|08:00||EUR||German Retail Sales||m/m||2.5%||-0.8%||-|
|08:45||EUR||French Consumer Spending||m/m||0.7%||-0.3%||-|
|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%||-|