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Friday, 2 Apr 2010
U.S. Non-Farm Payrolls on Tap
The U.S. payrolls report is due today with analysts forecasting the economy added 185,000 jobs last month. That would be an outcome that would likely lift the U.S dollar and boost expectations for higher U.S. interest rates.
USD - U.S Dollar Recovers Ground vs. EUR
The U.S. dollar hit a 7 month high against the Japanese yen on Thursday as Japanese investors rang in Japan's fiscal year by moving funds abroad into higher-yielding currencies and assets. The USD rose as high as 93.89 yen its best level since August 2009. It was last at 93.74 yen, up 0.3% on the day.
The greenback also rose against the EUR ahead of Friday's U.S. payrolls report. Economists forecast the economy added 185,000 jobs last month, an outcome that would likely lift the dollar and boost expectations for higher U.S. interest rates.
Strong manufacturing data from Europe and Asia also boosted risk appetite and the view that recovery is taking hold in economies around the world. That, however, kept U.S dollar gains in check against other major currencies, including the British pound and Canadian dollar.
EUR - EUR Rallies vs. Swiss Franc
The European single currency fell to record lows against the Swiss franc below 1.4150 francs, but then surged to session highs at 1.4410. It last traded up 0.6% at 1.4318 francs. Market players cited talk of intervention by the Swiss National Bank as lifting the EUR against the franc, adding there was some SNB activity in the dollar/Swiss franc pair.
The European currency rallied against the U.S dollar on Thursday, lifted by quarterly positioning and gains in the single currency against the Swiss franc as investors looked ahead to the U.S. non-farm payrolls report. The EUR rose 0.5% against the U.S dollar to $1.3578. The EUR was helped on Wednesday by data showing an unexpected fall in U.S. ADP private payrolls, suggesting Friday's data could come in below forecasts for the U.S. to have added 180,000 jobs in March.
Although the disappointing ADP data helped the EUR/USD as expectations for non-farm payrolls have come down a bit, payrolls are still forecasted to show a rise and the Greek story continues to weigh on the EUR.
JPY - Yen Falls Broadly
Japan's currency was near a 2 month low versus the EUR as gains in global stocks and expectations the Bank of Japan will keep borrowing costs near zero encouraged investors to sell the Yen to purchase higher-yielding assets. Japan's currency was at 127.29 per EUR from 127.50 after reaching 127.56 yesterday, the lowest since Jan. 26.
A spike in risk appetite also encouraged Japanese investors to sell the Yen as the new fiscal year gets underway. Losses in the JPY were limited as speculation traders took advantage of recent losses to buy the currency ahead of market holidays.
OIL - Oil Rises Above $85 a barrel
Crude oil prices rose 6% for the holiday-shortened week that ended Thursday as the dollar fell and expectations rose that the pace of economic recovery will pick up. Oil markets have ignored Wednesday's government report of the ninth consecutive weekly build in U.S. crude stocks, and a surprise, if small, rise in gasoline supplies.
U.S. government data showed U.S. crude inventories rose by 2.9 million barrels to 354.2 million barrels last week, Gasoline stocks logged an unexpected 300,000-barrel gain. Ahead of the long holiday weekend and with the key March U.S. jobs report due on Friday, traders also covered short positions, helping push Oil prices to their highest level in 18 months.
A bullish channel has formed on the daily chart, beginning on March 25th, striking the upper border of the channel for the second time yesterday. This may be a continuation pattern that is taking place prior to another significant bearish move in the currency pair. Traders should look to trade in the price range of the channel until the price breaks below the lower line.
The pound has shown significant strength over the past week. The long term downward sloping trend line on the daily chart has been broken as the pair has closed for two consecutive sessions above the trend line. The MACD histogram is trending higher, as is the 14-day RSI, indicating the pair has momentum behind the price move. Traders may want to use the 1.3545 resistance level as a price target. This price target also happens to be the upper border of the Bollinger Bands.
The pair has been steadily rising this week and has arrived at the resistance level of 93.75. A breach of this price will be needed for the short term correction to continue. There doesn't appear to be any technical resistance on the daily chart. If a breach of this price level is made, the next target may be the 97.75 level.
Despite the recent bearish correction the pair has experienced, the pair may begin to rise in the short term. The daily chart shows the 7-day RSI has dipped below the 30 level and breached above this line, indicating the price may rise in the short term. The next key resistance line rests at 1.0644.
The Wild Card
Yesterday spot crude oil breached the significant $84 resistance level that has held since the beginning of the year. The next resistance level on the weekly chart rests at the price level of $86.00. Forex Forex and commodity traders should note that a breach of this resistance level could propel the commodity higher on technical trading, all the way to $90.50
|02:30||AUD||MI Inflation Gauge||m/m||0.3%||-||-|
|03:30||AUD||ANZ Job Advertisements||m/m||0.0%||-||-|
|08:00||EUR||German Factory Orders||m/m||1.4%||-||-|
|10:30||EUR||Sentix Investor Confidence||17.1||-||-|
|10:30||GBP||Housing Equity Withdrawal||q/q||-13.0B||-||-|
|15:45||USD||Final Services PMI||54.8||-||-|
|16:00||USD||ISM Non-Manufacturing PMI||55.7||-||-|
|16:30||CAD||BOC Business Outlook Survey||-||-||-|
|00:00||NZD||NZIER Business Confidence||23||-||-|
|01:00||GBP||30-y Bond Auction||2.86|1.6||-||-|
|01:30||AUD||AIG Construction Index||47.8||-||-|