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Friday, 6 May 2011

US Non-Farm Payrolls Data on Tap Today

With today's Non-Farm Payroll (NFP) figure on the way, traders appear to have lost tremendous optimism about the stability of their portfolios and have temporarily shifted to safety. The US economy has so far benefited from this shift as a stronger dollar should give Americans more buying power in the days ahead.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddowndownnoupdowndown
Weekly Trenddowndowndownnodownup
Resistance1.46301.648081.250.87701.07850.8960
1.46101.646081.050.87501.07650.8940
1.45801.643080.750.87201.07350.8910
Support1.45201.637080.150.86601.06750.8850
1.44801.634079.850.86301.06450.8820
1.44601.632079.650.86101.06250.8800

Economic News

USD - US Dollar Strongly Bullish ahead of NFP Report

The US dollar experienced strongly bullish results yesterday as traders began to shift away from the euro following the European Central Bank's (ECB) announcement to hold rates steady. The release was followed by a statement which befuddled many investors and made determining the next rate hike difficult to predict. The USD gained on this confusion and moved higher against its European counterparts on heightened market anxiety.

With today's Non-Farm Payroll (NFP) figure on the way, traders appear to have lost tremendous optimism about the stability of their portfolios and have temporarily shifted to safety. The US economy has so far benefited from this shift as a stronger dollar should give Americans more buying power in the days ahead.

The issue of interest rate differentials has driven market participants bonkers over the past two weeks. Indeed, the shift in value of safe-havens and the EUR has made forecasting a much more difficult profession. Today's NFP release from the US economy, however, should give us some much needed perspective. If the figure comes out below expectations, which seems typical these past few months, then we should see a shift into the safety of the USD, JPY and CHF as traders flee risk.

EUR - The Euro: Yesterday's Powerhouse, Today's Poor House

The euro appears to have lost substantially against its primary currency rivals yesterday following the European Central Bank's (ECB) rate statement. The data releases published over the last several days have pushed many traders away from riskier assets, but the EUR had fought through the pain; that is, until yesterday.

Many analysts have noted that ECB President Jean-Claude Trichet's remarks during the rate policy statement made predicting the next rate adjustment far more difficult than they have been in the past. The surge in uncertainty pushed many traders into the safety of the US dollar as a result. The EUR/USD was down from its 17-month high above 1.4900 to a current price near 1.4570.

As for today, the euro is largely absent from the calendar, but with a few figures which may end up slamming the 17-nation single currency even more. The major news today is the US publication of Non-Farm Payrolls (NFP), but Germany's publication of industrial production for the month of April could show further stagnation in the region's industrial sector. Yesterday's German factory orders data fell well below expectations, meaning today's report could also disappoint, forcing many more to bail out of the EUR and into safer assets.

JPY - Japanese Yen Mixed as US Dollar Surges

The JPY has been trading with largely positive results since yesterday as investors turn their focus elsewhere. After a week of ups and downs, the Japanese yen appears set to make gains today as investors largely flee riskier assets. The low interest rates of the Japanese economy have helped pull many investors into the safety of the yen following yesterday's rate announcement by the ECB.

With Japan's economy coming back online from a week of holiday celebrations, the market should receive a modicum of additional liquidity from the return of this island giant. The impact may be felt in today's early hours, but the news from the US economy regarding Non-Farm Payrolls (NFP) will be today's biggest market mover. Traders should tune in to that report as it is likely to drive today's more important portfolio shifts and adjustments.

Crude Oil - Crude Oil Prices Plummet Sharply as USD Soars

The price of Crude Oil ended Thursday much lower as traders largely began to pull out from their investments in physical assets while the US dollar made a rapid jump. The result has been a sharp drop in oil prices, pushing well past yesterday's expected $107 a barrel and landing close to $102 by day's end.

Recent events have made speculating about oil prices more difficult. The plummeting value of the US dollar over the last few days should have helped lift oil prices, but the commodity remained in free fall for the third consecutive day. Rising stockpiles in the United States, reported Wednesday, may have helped fuel the shift away from oil as rising inventory tends to suppress price hikes. As for the rest today, oil prices appear heavily leaning towards the downside, with targets below $100 a barrel in sight.

Technical News

EUR/USD

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the 4-hour chart's Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the RSI. Going long with tight stops may turn out to pay off today.

GBP/USD

The price of this pair appears to be floating in the over-sold territory on the 8-hour chart's RSI indicating an upward correction may be imminent. The upward direction on the 4-hour chart's Slow Stochastic also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/JPY

The 4-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily Chart's RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops might be the right strategy today.

USD/CHF

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. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

The Wild Card

Gold

Gold prices are once again dropping, and it is currently traded around $1485.45 an ounce. And now, the 8-hour chart's RSI is giving bullish signals, indicating that gold prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Current Time: 09/17 18:58 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
09/17
19:30USD+ FOMC Press Conference***5
23:45NZD+ GDPq/q1.0%0.6%-5
00:50JPY+ Trade Balance-1.02T-0.99T-3
09/18
ALL+ G20 Meetings***3
02:30AUD+ RBA Bulletin***1
06:00AUD+ RBA Annual Report***1
07:00CHF+ Trade Balance3.98B2.56B-3
07:35JPY+ BOJ Gov Kuroda Speaks***5
08:30CHF+ Libor Rate<0.25%<0.25%-5
08:30CHF+ SNB Monetary Policy Assessment***5
09:30GBP+ Retail Sales m/m0.1%0.4%-5
11:00GBP+ CBI Industrial Order Expectations119-3
13:30CAD+ Foreign Securities Purchases-1.07B2.47B-2
13:30USD+ Building Permits1.05M1.04M-5
13:30USD+ Unemployment Claims 315K312K-5
13:30USD+ Housing Starts1.09M1.04M-3
13:45USD+ Fed Chair Yellen Speaks***5
15:00USD+ Philly Fed Manufacturing Index28.022.8-5
15:30USD+ Natural Gas Storage 92B--1
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