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Thursday, 5 Jun 2008
The Greenback Continues to Push Up
The US saw volatile trends yesterday in the market. The EUR\USD cross kept a steady rate throughout most of the day, trading around 1.5440. The USD showed strong bullish momentum against the GBP, and saw volatile behavior vs. the JPY.
A batch of data was released yesterday for the USD. First was the ADP Nonfarm Employment Change report, which showed that the US economy added 40K private sector jobs in May, well above the expected loss of 30K jobs. Later on, the Nonfarm Productivity report showed that productivity rose at an annual rate of 2.6% in the first quarter of the year, faster than previously estimated. Meanwhile, wage pressures have moderated from the final quarter of the last year with unit labor costs rising at an annual rate of 2.2%, as opposed to the previous 4.7%. Such news is welcomed by the Fed, as they ease worries regarding increasing inflation. Later, the Institute of Supply Management Non-Manufacturing Business Index fell slightly in May from 52.0 to 51.7 however, the key component of that index, business activity, rose to 53.6 from the 50.9 in April. At 06:45 GMT Fed Chairman Bernanke delivered a speech, admitting that the possibility of rising inflation expectations is a significant concern for the Fed, yet he stated that the US economy is very flexible and very efficient and therefore such outcome is not likely.
Today, the Unemployment Claims report will be published, and is forecasted by analysts to increase to 374K in May, up from April 372K total. Such an increase should have a negative effect over the USD. At 16:00 GMT Philadelphia Fed President Plosser will deliver a speech called the importance of financial econometrics for financial innovation and financial stability. Traders are advised to follow his speech carefully, as clues regarding future monetary policy are expected
Yesterday the EUR saw mix results against its major currency counterparts. It saw volatile behavior against the USD and the JPY, and it rose vs. the GBP.
The European Central Bank (ECB) President Trichet gave a speech yesterday, stating that the central bank is doing its best to be forward looking on the impact of the continuing crisis in financial markets. He further said that the euro system has provided notable stability during the turbulence and has effectively supported the implementation of the monetary policy. Later on, the Services Purchasing Manager's Index, that measures the activity level of purchasing managers in the manufacturing sector, showed similar figures to last month's 50.6 reading. European Retail Sales fell by 0.6% in April from March, and went down 2.9% from last year.
Today, the German Factory Orders are due at 10:00 GMT, and are expected to rise by 0.4% from last month. Later, the Minimum Bid Rate will be published, and the ECB is expected to keep its interest rate at 4.00%, unchanged since June 2007. Followed by the interest rate decision release will be the ECB Press Conference that will be help by the ECB President Trichet and his Vice President Papademos. The conference will be open to press questions, which usually leads to heavy market volatility.
Traders should follow today's news very closely, as the market is expected to fluctuate excessively during the interest rate statement
Yesterday, the JPY saw mixed results against most of its major currency rivals. The JPY underwent volatile developments versus the USD, the EUR, the GBP and the CHF. The JPY fell against the USD to 105.54 from 105.28 boosted by fears of more possible credit related looses and expectations about the Federal Reserve may raise its key interest rates by the end of the year to prevent a worrying rising inflation.
The only data coming from Japan yesterday was the Japanese Imported Auto Sales, which fell down by 20% from the previous year, as sales of imported vehicles by foreign car makers totaled 13,953 in May, down from 17,497 vehicles in the same month last year.
Today, the JPY is absent from the economic calendar, and the USD should be the main catalyst for JPY progressions. Therefore, traders are advised to follow U.S data and Euro Zone news with extra precaution today as they will mark future's JPY behavior.
The pair is in the middle of a very sharp bearish trend and is now floating around 1.5450. The 4 hour Slow Stochastic is a triple top formation with negative slope which indicates a continuation of the bearish move. Next target price might be around 1.5350, and it appears that going short might be a good choice today
The very distinct bearish channel continues as the cable still heads down with the channel. All oscillators are showing that the bearish will continue and that the cable will probably test the bottom barrier quite soon. With a target price of 1.9350 it appears that the preferable strategy might be to go short today
The pair is floating at the key level of 105.50 which is the very strong resistance level on the daily chart. If a breach will occur than it appears that a much stronger bullish move will be unleashed with a target potential of 107.20. Going long with tight stops might be a great strategy today before the key breach.
Range trading continues, as the pair still floats aimlessly on the daily chart. The oscillators are still floating in neutral territory with no distinct direction signal. There seems to be moderate bullish momentum on the hourlies yet forex traders are advised to wait for a clearer signal before entering the market on this one.
The Wild Card
The bearish corrective move continues at full steam and shows no signs of a halt. The daily Slow Stochastic is in a very bearish formation. forex Traders have a great opportunity of entering the market at the peak of the bearish momentum and enjoying what seems to be a very strong bearish trend.
|23:30||USD||FOMC Member Williams Speaks||-||-||-|
|00:30||AUD||AIG Construction Index||53.8||-||-|
|01:01||GBP||BRC Shop Price Index||y/y||-1.4%||-||-|
|02:00||AUD||HIA New Home Sales||m/m||-1.8%||-||-|
|02:01||JPY||Monetary Policy Statement||-||-||-|
|08:00||EUR||German Industrial Production||m/m||0.7%||-||-|
|08:01||JPY||BoJ Press Conference||-||-||-|
|08:45||EUR||French Trade Balance||-3.3B||-||-|
|09:00||CHF||Foreign Currency Reserves||540B||-||-|
|10:30||GBP||Manufacturing Production m/m||m/m||-0.8%||-||-|
|10:31||EUR||German 10-y Bond Auction||0.69|1.2||-||-|
|16:00||GBP||NIESR GDP Estimate||0.5%||-||-|
|16:30||USD||Crude Oil Inventories||4.0M||-||-|
|19:01||USD||10-y Bond Auction||2.24|2.7||-||-|