U.S Non-Farm Data release is set to dominate the trading between the Dollar and its major currency pairs this week. A number of other factors are also likely to impact the forex market today, such as the US Manufacturing PMI and minimum Bid Rate. Traders may find good opportunities to enter the market following these vital announcements.
Economic News
USD – Dollar Gains on Euro Losses
The dollar saw a very volatile session during last week’s trading. The dollar began last week’s session with a falling trend against the euro and the British pound. The EUR/USD pair reached as high as the 1.3680 level and the GBP/USD reached as high as the 1.5715 level. Yet eventually both pairs reversed trends, the EUR/USD is now trading near the 1.3320 level, and the GBP/USD near the 1.5500 level.
The dollar extended gains versus the euro on Friday after data showed U.S. consumer spending adjusted for inflation was flat in August as income fell for the first time in nearly two years, forcing households to dip into savings. Purchases rose 0.2 percent after a 0.7 percent increase the prior month
As for this week, the most exciting economic release is expected on Friday, as the Non-Farm Employment Change is scheduled. Current expectations are that the labor sector in the U.S. continues to recover during October. Traders are also advised to follow the ADP forecast of this release, which is expected on Wednesday, as it is likely to create high volatility as well in the marker.
EUR – Euro Sinks against Majors
The euro fell against the dollar on Friday and was set for its biggest monthly loss in 10 months as weak German retail sales added to a grim outlook for the global economy, while markets doubted the firepower of a beefed-up euro zone bailout fund. As the result, the EUR fell sharply against the USD, pushing the oft-traded currency pair to 1.3320. The 16 nation currency experienced similar behavior against the GBP and closed at 0.8580.
A higher than expected euro zone inflation reading for September dampening any prospects of a near-term ECB interest rate cut had little impact on the common currency. Analysts said the inflation outlook was benign, with markets staying focused on the likelihood of another recession. Adding to signs the global recovery was stuttering, German retail sales tumbled 2.9% on the month in August, falling at their fastest pace in more than four years.
Looking ahead to the following week, many interesting economic publications are expected from the euro-zone. The most significant of the all will surely be the Minimum Bid Rate, which is scheduled at Thursday. The Minimum Bid Rate is in fact the euro-zone’s interest rates announcement for February, and analysts estimate that the ECB will leave rates at a record low of 1.50%. Traders are also advised to follow the ECB’s press conference which will be held at the time, as this is also likely to generate high volatility in the market.
JPY – Foreign Influence over the Yen will Likely Continue Today.
The Yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the EUR yesterday and closed its trading session at around the 103.60 level. The JPY also saw bearishness against the GBP as it fall around 100 points and closed at 119.60.
As for today, Japan will be absent from the economic calendar. The JPY’s trends will be affected by the rallies of its primary currency pairs. It seems the USD and EUR are expected to continue a volatile trading session today and their crosses with the JPY will likely be as well. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today.
Crude Oil – Crude Oil Decline on Economic Concern
Oil prices slipped below $80 on Friday as the dollar strengthened and doubts remained about the resiliency of the economic recovery and Europe’s struggle with its debt crises.
Oil and other commodities denominated in dollars for global trading tend to rise when the U.S. currency falls as they become cheaper for holders of other currencies. A move away from dollar-based pricing of the world’s leading commodity could further weaken the greenback.
As for this week, traders should pay attention to the U.S Non-Farm report scheduled on Friday, as it tends to have a large impact on Crude Oil’s prices recently, especially for the short-term.
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 8-hour chart’s Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the 4-hour chart’s Slow Stochastic. Going long with tight stops may turn out to pay off today.
GBP/USD
The GBP/USD has gone increasingly bearish in the past few days, and currently stands at the 1.5520 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the 2-hour chart’s Stochastic Slow signals that a bullish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.
USD/JPY
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.
USD/CHF
The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s RSI signals that a bearish reversal is imminent. Going short with tight stops might be a wise choice.
The Wild Card
USD/DKK
This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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