Jan 6, 2010

Forex Crunch Forex Daily Outlook – January 6th 2010

Forex Crunch Forex Daily Outlook – January 6th 2010

Forex Daily Outlook – January 6th 2010

Posted: 05 Jan 2010 02:00 PM PST


As the week advances, the calendar gets more crowded, especially in the US. ADP Non-Farm Payrolls and the FOMC minutes are among the important indicators today. There are many important events elsewhere. Let’s see what’s up for today.

British Nationwide Consumer Confidence starts the day right at the beginning. After many months of steady growth, it’s predicted to drop from 73 to 72 points.

Later in Britain, Services PMI is predicted to follow the Manufacturing PMI on Monday and rise as well – from 56.6 to 56.8 points. For more on the British Pound, read the GBP/USD forecast.

The Australian dollar pushed higher in recent days. Today, Australian Building Approvals are released, and they’re predicted to rise by 3.1% after a 0.6% drop last month.

For a technical analysis of the Aussie, read the AUD/USD forecast.

In Europe, Final Services PMI is expected to confirm the early read at 53.7. Industrial New Orders are expected to drop by 0.9% after printing a nice surprising rise of 1.7% last month.

After yesterday’s CPI Flash Estimate came within expectations, today’s producer prices are expected to follow last month’s 0.2% rise.

European indicators have been OK so far, currently not enough for pushing the EUR/USD significantly higher. For more on the Euro, check out the EUR/USD forecast.

In the US, we get too small hints towards the Non-Farm Payrolls release on Friday. Challenger Job Cuts start, and they are soon followed by the ADP Non-Farm Employment Change, or “mini-NFP”.

ADP Non-Farm Payrolls should be taken with a grain of salt. They’re not always a good indicator for the real Non-Farm Payrolls. They’re expected to show a loss of 74,000 jobs, less than half of last month’s 169,000 lost jobs.

Here’s a preview for the Non-Farm Payrolls.

The news in the US isn’t over: ISM Non-Manufacturing PMI is expected to return to positive ground and rise above the 50 mark, after dropping below it and disappointing. Monday’s manufacturing figure exceeded expectations in a nice manner, stopping the dollar retreat.

In the evening, the FOMC Meeting Minutes are released. Bernanke’s confused message last time probably won’t be clarified, but the markets will shake anyway…

Near the end of the day, kiwi traders will await the Trade Balance in New Zealand. It’s predicted to show a squeezing deficit this time.

That’s it for a busy day. Happy forex trading!

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EUR/USD Failed to Break Out

Posted: 05 Jan 2010 08:01 AM PST


The Euro tested the upper border of its trading range and bounced. There are many reasons for explaining the move upwards, and one good reason for not seeing a break.

EUR/USD went as high as as 1.4480 – an important resistance line, and then fell back down to the low 1.44s. Since December 16th, the pair ranged between the support line of 1.42 to the resistance region of 1.4444.

As mentioned in the EUR/USD forecast, there isn’t a single point of resistance but rather a region: 1.4444 was the resistance line during the summer. After this pair broke his line, it stalled for a while, and the bottom border before continuing upwards was 1.4480.

After the fall on December 16th, this range effective resistance. EUR/USD traded below 1.4444, but today it stretched itself towards 1.4480 before bouncing back.

There were a few reasons for the Euro to rise:

  • The number of unemployed people in Germany fell again, surprising economists again. This improvement in the continent’s largest economy is a good sign.
  • CPI rose by 0.9%: Inflation is picking up in Europe, after suffering from a long period of deflation. Although this exact rise was predicted, it still supplies hope for a rate hike.
  • American Pending Home Sales fell by 16%! A fall was expected after 9 straight months of rises, but this big scale wasn’t predicted. Following the drop in the new home sales two weeks ago, there’s a growing notion that the economy is still very dependent on the stimulus actions by the government. When the aid is withdrawn, the economy is down again.

The only dollar positive news was a higher-than-expected growth in US factory orders. This cannot explain the fact that EUR/USD didn’t make a breakout.

The reason that I see for no breakout is the big event ahead: Non-Farm Payrolls. This event sets the tone for this week’s trading and for a few weeks ahead. So – the market awaits the NFP, which might finally show growth in jobs after two years. And during the tense days and hours before this release, a breakout isn’t likely.

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