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Friday, 5 Mar 2010
U.S. Non-Farm Payrolls Set to be Released Today!
The forex market is bracing itself for some heavy volatility as the U.S. Non-Farm Payrolls figure is set to be released today. The monthly report is one of the most significant market indicators and will heavily impact Dollar pairs.
USD - USD May See Gains Following NFP Report
The U.S. Dollar, coming off a fairly bearish week, may see a reversal of fortunes today with the Non-Farm Payrolls Report set to be released at 13:30 GMT today. EUR/USD saw some heavy fluctuations throughout the week, with the Euro making gains as of late based new plans to cut Greek deficits. Similarly, GBP/USD was fairly bullish as risk taking among investors returned. Currently, the pairs are trading at 1.3597 and 1.5057 respectively.
The Non-Farms Payroll figure is forecasted to show that the U.S. economy shed approximately 56K jobs last month. The figure is higher then last month, which at first glance might mean the Dollar could turn bearish in trading today. That being said, the U.S. economy has shown impressive signs of growth lately. A NFP figure that meets or exceeds expectations will likely increase investor confidence in the U.S. economy, and could lead to major gains for the greenback.
In addition to the NFP report, the official U.S. unemployment rate will also be published at 13:30 GMT. While this is generally seen as a lagging indicator, the figure could influence USD for the foreseeable future. This is especially true as next week does not have a lot of major USD news events.
EUR - Investors Stay Clear of EUR Ahead Of NFP Report
The Euro appears to have entered a bearish trend in overnight trading as risk appetite has subsided ahead of a key U.S. employment report. Earlier this week, the Euro was able to see some significant gains following a more detailed plan for a Greek bailout. Following the European Central Bank decision to keep interest rates at their record lows, as well as the announcement from the head of the ECB that EU growth would be uneven, the Euro began its downward descent.
EUR/USD is currently trading at around the 1.3590 level, down almost 90 pips from yesterday afternoon. EUR/GBP is also down significantly, having dropped almost 40 pips since yesterday to its currently level of 0.9034.
In addition to the Non Farm Payrolls report, Euro traders will also want to pay attention to the British PPI Input figure set to be released at 09:30 GMT. The report is a leading indicator of consumer inflation in the U.K. Analysts are forecasting a low figure of around 0.1%, which could help the Euro make some much needed gains against Sterling.
JPY - Yen Takes Losses Against USD
Following a fairly bearish week for USD/JPY, it appears that the Yen has steadily reversed courses against the greenback. Beginning yesterday afternoon, the pair shot up almost 90 pips to reach its current level of 89.22. The Yen has faired better against the Euro as of late with the EUR/JPY falling over 70 pips in trading yesterday. The pair has bounced back slightly, and is currently trading at the 121.28 level.
Today, Yen levels will likely be determined by the result of the U.S. Non-Farm Payroll Report. If the figure comes in as forecasted, the Dollar will likely make gains on JPY. That being said, if this does occur, both the Euro and Pound will likely drop. The Yen should be able to capitalize on the fall of its European rivals.
OIL - Crude Prices Fall Ahead of U.S. Jobs Report
While the price of crude marginally increased in overnight trading, the commodity is still down over 30 cents from yesterday morning. This is largely due to the strong Dollar and the relatively low demand among U.S. consumers. Currently, the commodity is trading around the 80.57 level.
The U.S. Non Farm Payrolls could play a significant part in determining crude prices for the near future. Analysts are predicting that worse then expected NFP figures would likely be bad for the price of crude. High unemployment generally leads to low demand as consumers try to conserve their disposable income. Should the NFP report come in better then expected, demand should increase and drive up prices.
The pair has shown a lack of a trend this week, range trading with significant support and resistance levels at 1.3430 and 1.3680. The 4-hour chart shows the price has dropped from the Bollinger Band's upper border and crossed below the 20-day moving average line. Traders could go short today, using the lower Bollinger Band as a price target, with a secondary support level at 1.3430.
The strong bearish trend continued yesterday after a brief correction earlier in the week. Those traders that missed the breakout yesterday can still enter into the market at a relatively good price. The 4-hour chart's MACD shows a down-sloping histogram and a potential bearish cross forming. Traders may want to wait for the cross and enter the market short with a target at 1.4880.
Traders may find a good setup on the 4-hour chart. After a quick correction to the bearish trend, the price has risen to a resistance level of 89.35 and failed to break this mark. One of the best times to enter into the market is at a resistance level. A bearish cross may be forming on the chart's Slow Stochastic Oscillator, indicating the potential for a downward price movement. Going short seems to be the right play today.
The daily chart shows a channel has formed, beginning on Feburary 19th. The price has made contact with the downward sloping lower border three times, making this a significant continuation pattern. Traders may want to go long on this pair with a price target at 1.0880, the upper border of the channel.
The Wild Card
The daily chart shows some resistance. Both the 14-day RSI and the 7-Day RSI have crossed back below the overbought region, indicating sell signs. The MACD histogram is downward sloping, indicating a weakening trend. The MACD lines also appear headed for a bearish cross. Forex traders may want to scale back any long positions they may have and go short on crude oil today.
|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||-||-|