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Friday, 2 Sep 2011

US Non-Farm Payrolls on Tap Today

Most significant on today's calendar will be the US publication of its Non-Farm Payrolls (NFP) data. Should today's news foreshadow a modest growth in the largest economy's employment sector, an assessment that seems less likely from data released just days ago, there is a possibility that more investment will get pushed towards the higher yielding abilities of the European currencies as investors seek to diversify their portfolios.

Daily Trendnonodowndownnono
Weekly Trendupnodowndownupup

Economic News

USD - USD Consolidating ahead of NFP Release

The EUR/USD was seen moving towards 1.4270 late yesterday as investors attempt to speculate on market direction ahead of today's highly anticipated Non-Farm Payroll release. A weaker-than-forecast uptick in US private sector employment Wednesday added to risk sensitivity for many investors, leading some to await today's news before entering more strongly.

With private sector employment rising in the US at a slower pace over the past few months, the value of the USD appears to be consolidating as riskier currencies like the EUR adjust ahead of this month's interest rate decisions. Bank interventions in Japan are also making the appeal of safe-havens diminish, helping to prevent a strong rise in the dollar in this week's trading.

Most significant on today's calendar will be the US publication of its Non-Farm Payrolls (NFP) data. Should today's news foreshadow a modest growth in the largest economy's employment sector, an assessment that seems less likely from data released just days ago, there is a possibility that more investment will get pushed towards the higher yielding abilities of the European currencies as investors seek to diversify their portfolios.

EUR - EUR Flattens Out after Heavy News Day

The euro (EUR) was seen trading with largely mixed results yesterday as traders moved into and away from riskier assets across the region. Against the US dollar (USD) the euro was seen trading sideways in late trading as shifts away from the greenback, due to uncertainty about the US employment sector, caused several market participants to opt for other stores of value. The pair was last seen consolidating near 1.4270 in late trading Thursday.

The mixed reports out of Europe yesterday have appeared to confound traders who were anticipating a string of bearish results. Though debt concerns still loom in the region, optimistic data has had the impact of muting the EUR's losses against its primary basket of currencies. With a heavy news day expected today, traders should see some added volatility in today's EUR market.

On tap today, traders will witness the release of a highly significant report from the United States on its non-farm employment sector. Should the data come in bearish, we could see heftier shifts to safer assets in the days and weeks ahead. This would likely push the value of the EUR lower over the long-haul as traders flee risk.

AUD - Australian Retail Sales Surprises Market; AUD Bullish

The Australian dollar (AUD) was seen making leaps and bounds yesterday, as market reports showed modest growth across the boards. Despite recent reports on Australia's shrinking housing sector, yesterday's publication of Australian retail sales showed a broadening expansion striking several sectors of Australia's economy.

Expectations for the retail sales report was for a modest growth of 0.3% from last month's contraction of 0.1%. The actual figure of 0.5% growth has led many investors to push back into the Australian dollar (AUD) in recent trading. National data on housing and employment has somewhat halted this ascent as many investors hesitate to move into the once-burgeoning AUD. This data, combined with dismal HPI and building approvals reports, has so far caused the Aussie to still see gains, albeit weakly.

Crude Oil - Crude Oil Prices Pushing towards $89 a Barrel

Crude Oil prices found solid support Thursday, moving towards $89 a barrel in late trading as sentiment appeared to favor mild stability in global manufacturing demand. Data releases out of the UK and Europe these past two weeks were driving many investors back into safer assets as most reports suggested contraction among the major industrial nations of the West would gain momentum. If proven accurate, the new outlook would have oil prices falling back into a bearish channel as demand decreases further, but so far traders are seeing market fundamentals push oil prices higher.

As investors seek shelter, the value of crude oil, which was seen holding steady all week, may see additional gains before today's close. A sudden jump in dollar values due to a sudden return to risk aversion, as expected, could drive many investors into lower investments on physical assets; driving oil prices downward by the middle of next week.

Technical News


Last Friday's candlestick posted an outside day up. The EUR/USD has followed up this price action by breaking out above the falling resistance line off of the May high and triggering stops that were lurking above the 1.4520 area. Initial resistance for the pair comes in at 1.4540. A close above 1.4700 would open the door to the May high of 1.4940. To the downside the euro may find willing buyers at 1.4325 where the 20-day moving average is located. Further support is found at 1.4260 off of the rising support line from the July low as well as the long term trend line at 1.3940.


After failing to make a close above the 1.6550 resistance level sterling was sold only to find support at its 55-day moving average near 1.6210. Rising daily stochastic oscillators hint at an additional test of the range between 1.6550 and 1.6615. A break here may have scope to the April high of 1.6745. Should the 55-day average fail to contain the pair support is found at 1.6110 where the 200-day moving average is floating. 1.6000 may also prove to be supportive.


The doji candlestick reversal has bought the yen some temporary respite from the selling pressure at the 76 yen level as the pair failed to test the all-time low last week. However, falling stochastics appear on both the weekly and monthly charts and hint at additional declines in the USD/JPY. A lack of support on the charts makes it difficult to find a target to the downside. A move higher could see resistance at last week's high of 77.70 followed by 78.50 and the post intervention high of 80.20.


The reversal of the USD/CHF continues and the pair is beginning to show additional bullish signs. Traders should eye the close of the monthly candlestick. As it stands now the candle is set to close on hammer pattern, a potential reversal pattern that hints at additional gains. The pair is testing the falling trend line from the February high at 0.8090 and if broken could turn into support as often occurs with previously broken trend lines. Additional resistance is found at 0.8270 followed by the 100-day moving average at 0.8340.

The Wild Card


Since peaking in early March the AUD/NZD has fallen from 1.3790 to a low of 1.2315. However, a bullish head and shoulders reversal pattern has formed on the daily chat with the neckline providing resistance at 1.2750. Forex traders should note that a measured move from the head of the pattern to the neckline measures 400 pips. In the past the 1.3180 level has served as an important resistance and support level.

Current Time: 11/24 23:53 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
23:50JPY+ Monetary Policy Meeting Minutes---3
00:30AUD+ Construction Work Doneq/q1.6%-1.8%-3
07:00CHF+ UBS Consumption Indicator1.65--1
09:30GBP+ BBA Mortgage Approvals 44.5K45.5K-1
10:00EUR+ Italian Retail Salesm/m0.3%0.5%-1
10:01EUR+ German 10-y Bond Auction0.44|1.2--1
10:20AUD+ RBA Assist Gov Debelle Speaks---3
12:30GBP+ Autumn Forecast Statement---3
13:30USD+ Core Durable Goods Orders m/m-0.3%0.5%-5
13:30USD+ Unemployment Claims 271K273K-5
13:30USD+ Core PCE Price Index m/m0.1%0.1%-3
13:30USD+ Durable Goods Orders m/m-1.2%1.6%-3
13:30USD+ Personal Spending m/m0.1%0.3%-3
13:30USD+ Personal Income m/m-0.1%0.4%-1
14:00USD+ HPI m/m0.3%0.5%-1
14:45USD+ Flash Services PMI54.855.2-1
15:00USD+ New Home Sales468K500K-3
15:00USD+ Revised UoM Consumer Sentiment93.193.2-3
15:00USD+ Revised UoM Inflation Expectations2.5%--1
15:30USD+ Crude Oil Inventories0.3M--3
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