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Friday, 4 Dec 2009
U.S. Non Farm Employment Change to Set the Level for the USD Today
Today, traders should pay close attention to the release of the U.S. Non-Farm Employment Change report. This indicator always provides for extreme market volatility in the major currency pairs. Traders may find good opportunities to enter the market following this vital announcement at 13:30 GMT
USD - Non-Farm Payroll on Tap
The U.S dollar rose broadly yesterday against the JPY and GBP after data showed the number of U.S. workers filing for first-time jobless benefits slipped in the latest week, adding to hopes the job market is improving. By yesterday's close, the USD rose against the JPY, pushing the oft- traded currency pair to 88.25. The dollar experience similar behavior against the GBP and closed at 1.6540.
Economic data was mixed on Thursday as new applications for U.S. jobless benefits unexpectedly fell last week to the lowest level in more than 14 months, suggesting a labor market edging toward stability, while productivity was less robust in the third quarter. Economic recovery does not appear to be improving at the speed many investors were hoping for, and currencies appear to be tracing the movement of stocks as a result. While recovery floats between positive and negative economic data, risk appetite may be suffering as a result.
Looking ahead today, the news event that may have a very large impact on the Dollar and its main currency pairs in today's trading is Non-Farm- Employment Change around 13:30 GMT. This report is very important as likely to Impact the dollar volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow this release.
EUR - EUR Slips vs. Dollar but Firm vs. Yen
The EUR finished yesterday's trading session with mixed results versus the major currencies, after the European Central Bank hinted it would slowly start withdrawing emergency liquidity. The 16-nation currency extended gains versus the Japanese Yen during yesterday trading session, to trade above 132.85 amid a broad sell-off in the JPY. The EUR did see bearishness as well as it lost over 50 pips against the USD and closed at 1.5055 levels.
The ECB kept its main interest rate unchanged at 1% a record low, but still higher than the Federal Reserve's or the Bank of England's rates. Higher interest rates can support a currency as investors move funds to where they earn the best returns.
European Central Bank President Jean-Claude Trichet said Thursday the economy of the 16 countries that use the EUR will grow at a moderate pace next year, but the recovery will be "uneven and subject to risks." He confirmed widespread speculation that the ECB will start winding down its extraordinary measures, which include cheap loans to banks that were used to provide the financial system with extra liquidity during the financial crisis.
JPY - Yen Slips against the Majors
The Japanese Yen saw a bearish trading session yesterday, losing ground against most of its currency crosses. The JPY fell against the USD and closed at 88.20, while the EUR/JPY cross rose to around 132.85.
The yen was under pressure for the second straight day after the Bank of Japan said this week it would further ease monetary policy in order to combat a surging yen and dropping prices. The dollar fell to a 14-year low of 84.80 on Friday. Japanese officials then had mentioned intervention as a possibility in order to weaken the yen. But this week's action plans to offer about 10 trillion yen ($115.8 billion) in short-term loans to commercial banks to boost liquidity and maintaining the key interest rate at 0.10% could help weaken the yen without resorting to selling the currency.
OIL - Crude Falls Below $76
U.S. crude prices fell toward $75.70 a barrel on Thursday as weak U.S. service sector data and rising U.S. oil inventories outweighed losses in the dollar. Data showed the U.S. services sector unexpectedly contracted in November, with an index measuring activity fell to its lowest reading since July and put pressure on U.S. stocks and commodity.
Crude prices tumbled on Wednesday after the release of U.S. inventory data, which showed crude oil inventories jumped last week as the weak economy continued to batter demand in the world's top consumer.
Looking ahead, traders are advised to watch carefully the global stock markets and the major economic indicators which will be published from the U.S. in order to predict the next movements in oil prices.
The typical range-trading on the hourly chart continues. The 4-hour chart's RSI is floating in neutral territory. However, there is a fresh bearish cross forming on the daily chart's Slow Stochastic indicating a bearish correction might take place in the nearest future. Going short might be a wise choice.
The cross experienced much bearishness yesterday, and currently stands at the 1.6525 level. However, there is a fresh bullish cross forming on the 4- hour chart's Slow Stochastic indicating a bullish correction might take place in the nearest futureWhen the upward breach occurs, going long with tight stops appears to be preferable strategy.
The pair has gone increasing bullish recently, reaching as high as the 88.46 level. The chart's 4-hour MACD supports a further bullish behavior for this pair, whereas the chart's 4-hour RSI contradicts this. Entering the pair when the signals are clearer may be a wise choice today
There still seems to be plenty of steam left in the pair's upward momentum. The MACD of the 4-hour chart and RSI of the daily chart support this upward notion. Entering the bullish trend now may be a wise choice today.
The Wild Card
Crude Oil prices rose significantly in the last month and peaked at $77 per barrel. However, there is a bearish cross on the daily chart's Slow Stochastic suggesting that the recent upwards trend is losing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.
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