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Friday, 4 Sep 2009
U.S. Non-Farm Employment Change to Determine Today's Trends
The U.S. Non-Farm Employment Change Data is set to be published at 12:30 GMT, and is expected to be the most important news event when it comes to market volatility. Traders are also advised to follow the G20 Meeting that will commence today, and the U.S. Unemployment Claims data at 12.30 GMT. In the meantime, open your positions in the majors now, as today's trading gets under way.
USD - Dollar Trades Lower Before U.S. Jobs Report
The U.S. Dollar was slightly stronger vs. the EUR on Thursday, as investors squared positions ahead of the U.S. Non-Farm Payrolls report later today. The USD also traded near a week low against the British Pound before a U.S. government report forecast to showed employers eliminated fewer jobs last month, sapping demand for the greenback as a refuge from the global recession. The USD traded at $1.6323 per pound from $1.6275 yesterday, after falling to $1.6413, the lowest level since Aug. 25.
The greenback briefly extended gains against the Japanese Yen on Thursday, after the Institute for Supply Management said its services index rose to 48.4 in August from 46.4 in July. The U.S. currency finished trading at 92.58 Yen from 92.28 Yen, and is poised for a 4th weekly loss, the longest stretch since December.
Today's Non-Farm payrolls data is expected to have a strong impact on the U.S currency. Any result could be a surprise, and the Dollar could go either way as a result. In any case, traders are unsure how the market will react to today's data. A weak report could feed risk aversion, boost Treasuries and actually aid the U.S Dollar. Then again, a better than expected result might be seen as a sign of relative U.S. economic strength, and lift the Dollar. Or it could also encourage risk-taking and aid commodities and higher-yielding currencies at the Dollar's expense.
EUR - EUR Drops versus the Dollar on ECB President Trichet's Comments
The EUR gave back early gains against most major counterparts after the European Central Bank kept Interest Rates at a record low of 1%, and stated that the period of contraction has come to an end in the Euro-Zone. The EUR/USD cross slipped to $1.4250, after having slipped from a peak of $1.4346 on Thursday. This was after the European Central Bank President, Jean Claude Trichet made less hawkish statements than many expected.
Meanwhile, the European currency also headed for its first weekly decline versus the Pound since Aug. 7 after ECB's Trichet warned yesterday of a rather uneven recovery, even as the ECB raised its growth forecasts. The British Pound advanced as economic data showed the U.K. services sector growing more rapidly than had been anticipated last month. The news sent the GBP/USD cross as high as $1.643 during Thursday's trading session.
Trichet's remarks that the economic recovery is not strong enough to start withdrawing monetary stimulus measures hurt the single currency too. Still, market players reported good support under $1.4200, which should hold into the today's job reports data from the U.S.
JPY - The Yen Pulls Back From 7 Week High
The Japanese Yen weakened against 14 of its 16 major counterparts on Thursday on speculation Asian stocks will extend a global equity rally, spurring demand for higher-yielding assets. The JPY retreated from a 7 week high against the U.S Dollar as higher share prices prompted investors to trim holdings of the low-risk Japanese currency.
The Yen's retreat also occurred due to a rally in Chinese shares prompting investors to trim holdings of the low-risk JPY. Japan's currency may decline for a second day versus the EUR as futures on the Nikkei 225 Stock Average expiring in September closed at 10,235 in New York yesterday, higher than 10,230 in Osaka.
Crude Oil - Oil Under Pressure on OPEC Output Expectations
Crude Oil ended Thursday's volatile trading without any gains as investors reacted to a weekly jobless report. Prices settled at $68.12 a barrel, as disappointing news from the labor market outweighed economic optimism from data showing that the U.S. service sector and retail sales improved. Traders are also eyeing news that big Oil producers are increasing output. OPEC is expected to leave output targets unchanged when it next meets on September 9th in Vienna.
U.S. Crude prices have been range bound between $65 to $75 a barrel since the start of August, fluctuating on the latest clues about the speed of an impending economic recovery. However, there's not a whole lot of momentum in the market in either direction. The trend for Crude Oil, which has been down, is still in force this week. Oil prices are not likely to break out of the confines of the current range in the short term, analysts say.
The pair has been range trading between the 1.4190 and the 1.4380 levels in the past several days. The daily chart seems to be showing misleading data. However, the 4-hour chart offers a more accurate picture. The Stochastic slow of the 4-hour chart shows the pair sitting in the oversold territory, signaling that an upward correction in the coming hours is imminent. Entering the pair at an early stage seems to be a wise choice today.
The GBP/USD cross has experienced a bullish trend for the past 2 days. However, it seems that this trend may be coming to an end today. The RSI of the 4-hour chart shows the pair floating in the overbought territory, indicating that a downward correction will happen anytime soon. This view is also supported by the daily chart's MACD. Going short with tight stops may turn out to pay off today.
The cross rose yesterday, despite declining significantly lower this trading week. It seems that the chart's oscillators are showing misleading data. On one hand, the daily chart's Stochastic Slow and the 4-hour chart's MACD supports a bullish trend for today. On the other hand, the Stochastic Slow of the daily chart supports a bearish move for today. Entering the pair when the signals are clearer seems to be the right choice for now.
The USD/CHF cross made a slight bearish correction yesterday, despite falling significantly on Wednesday. The MACD of the hourly chart indicates that the pair will go higher today. However, the MACD of the weekly chart and Stochastic Slow of the 4-hour chart seems to be more accurate, supporting a downward trend for today. Going short with tight stops could bring big profits today.
The Wild Card
This popular commodity has recorded a 3 day winning streak, as it stands at the $990 level. Analysts expect Gold to go higher for yet another day. They may be right, as gold approaches a $1000. The Stochastic Slow of the hourly charts supports the upward trend for today. Going long with tight stops may bring high returns for forex traders today.
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