Wednesday, 31 Mar 2010

Dollar Falls Broadly After ADP Employment Data

Trading during the New York session was highlighted by the release of the ADP Non Farm Employment Change. The report failed to meet market expectations and helped to send the dollar tumbling versus the major currencies and spot crude oil prices higher.

The ADP Non-Farm Employment Change registered a loss of 23K jobs on expectations of an increase of 40K jobs. This sent the dollar lower across the board following the negative U.S. economic news.

The EUR/USD rallied to a high at the resistance level of 1.3547 after opening the trading day at 1.3396. The GBP/USD was higher at 1.5188 from 1.5068, while the JPY was highly volatile but unchanged at the price of 93.42.

The price of spot crude oil dropped after the release of worse than expected weekly crude oil inventory numbers, as the commodity gave back all of price gains from the Japanese and the European trading session. The U.S. Energy Information Agency reported an increase of 2.9M barrels of crude oil on market expectations of a 2.4M barrel rise.

However, following the release of worse than expected ADP Non-Farm Employment Change numbers, the price of spot crude oil bounced to a daily high of $83.70. This was largely due to dollar weakness following the release of the payrolls report.

Today's worse than expected employment numbers were a negative for the dollar, but the long term bearishness of the EUR should continue. Tomorrow traders will need to follow the British Manufacturing PMI, along with weekly U.S. unemployment numbers and the ISM Manufacturing PMI. The major resistance and support levels for the EUR/USD rest at 1.3570 and 1.3385.