Feb 4, 2010

Forex Crunch Forex Daily Outlook – February 4th 2010

Forex Crunch Forex Daily Outlook – February 4th 2010

Forex Daily Outlook – February 4th 2010

Posted: 03 Feb 2010 11:49 AM PST


Very busy day ahead: rate decisions in Britain and Europe are the highlights in a crowded calendar, one day before the Non-Farm Payrolls.

Things are shaky in the forex market. The dollar weakened during the week but then erased the losses after the ADP Non-Farm Payrolls was good. The major pair, EUR/USD is currently holding steady. Read Casey Stubbs’ latest analysis for this pair.

Australia starts the day with two major releases: Retail Sales are predicted to rise by 0.3%, much less than last month’s rise. Building Permits are predicted to drop after making a sharp rise last time.

The Australian dollar is still struggling after the disappointing rate decision, which left the cash rate unchanged and the Aussie lower. Carry trades are not fashionable now…

For more on the Aussie, read the AUD/USD forecast.

In Switzerland, Trade Balance shows a surplus, and will probably continue to do so. It’s predicted to rise to 2.33 billion, helping the Swissy.

In Britain, the Halifax HPI is an important indicator for the Pound, even though it’s released close to the rate decision. House prices are predicted to rise by 0.9%, similar to last month’s rise.

Mervyn King will probably finish the Quantitative Easing program, and not spill any more pounds on the markets. The Asset Purchase Facility is running out of the 200 billion pounds allocated to it, and probably won’t be renewed. Interest rate hike? No news is expected soon. The Official Bank Rate will probably remain unchanged at 0.5%.

We might get hints for future moves in the MPC Rate Statement. Employment and prices are better in Britain, so maybe there’s some rate hike far in the horizon. For more on GBP/USD, including technical levels, check out the British Pound forecast.

Also the Euro will receive a rate hike. Jean-Claude Trichet, president of the ECB, isn’t expected to move the European Minimum Bid Rate from 1%. There’s too much trouble in Europe, especially on the eastern front – Greece. In the accompanying ECB Press Conference, the focus will be on the resolution of this crisis.

Before the rate decision, German Factory Orders are released, and are expected to show a smaller rise than last month – only 0.2%.

For more on the Euro, read the EUR/USD forecast.

American Unemployment Claims are the last hint before the Non-Farm Payrolls, after the ADP NFP made a nice surprise. Jobless claims are expected to rise to 470K, not a big change from last week.

Factory Orders are predicted to rise by 0.7%, also similar to last month. Also note the quarterly Prelim Nonfarm Productivity (a rise is expected) and the Prelim Unit Labor Costs which is expected to drop once again.

Later in the day, Thomas Hoenig, a known “hawk will make a public appearance. He’s mentioned as a possible heir to Timothy Geithner’s seat as Treasury Secretary.

In Canada, Building Permits are expected to rise by 2.7% after a drop last month. This will shake the loonie before tomorrow’s employment figures. Another important figure in Canada is the Ivey PMI, an important gauge of the economy that fell below 50 points last month, and is now expected to rise back above it. Mark Carney, head of the BOC will be speaking, and might also move USD/CAD.

Check out the Canadian dollar forecast for more.

That’s it for today. Happy forex trading!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Time for a Positive NFP

Posted: 03 Feb 2010 07:15 AM PST


Non-Farm Payrolls must show gains in jobs this time – the high expectations became higher with the release of the ADP figure that was better than expected. Will there be dollar rally on Friday? Here’s a preview for the Non-Farm Payrolls for January.

Last month’s Non-Farm Payrolls were disappointing and showed a loss of 85,000 jobs in the US in December. There was one point of light – November’s number was revised to the upside and was positive – 4,000 jobs were gained in November. This is what stopped the dollar from dropping sharply.

ADP Non-Farm Employment Change, which measures the jobs in the private sector, showed a loss of 22,000 jobs. While this is still a negative number, it was better than early expectations for 31K lost jobs. In addition, last month’s number, 84K lost jobs was revised to the upside – 61K lost jobs.

This preliminary figure comes two days before the Non-Farm Payrolls and is sometimes considered as the “mini-NFP” or an indicator. I don’t take this as an indicator, but it sure is a market mover – the dollar made gains immediately after the release. EUR/USD, that already flirted with the 1.40 line, fell back down. GBP/USD fell below 1.60.

Apart from moving the markets in the short term, the ADP NFP creates expectations for Friday. Current market expectations are for a gain of 13,00 jobs in January. Some analysts are expecting a loss of jobs while others are expecting a higher gain.

A positive number will boost the dollar on Friday. It will raise the chances of a rate hike, or at least the removal of the pledge to keep the interest rates low for “an extended period of time”. A positive number is necessary to erase the doubts about the Q4 GDP, which was strong but was jobless. A jobless recovery isn’t enough for Americans, and isn’t enough for the dollar.

If Non-Farm Payrolls show a loss of jobs, this will be disastrous for the dollar, as the expectations are very high now.

I’ll be following the Non-Farm Payrolls release and the impact on the forex market with Currensee and SpotEuro Trader Alex Kazmarck (10 years of experience) for a special live trading room webinar featuring analysis and commentary before and after the release of this very important economic indicator.

I’ve watched this webinar last month and it was fascinating. The focus is on the EUR/USD pair. You get to learn about trading news events, live technical analysis and derivation of support and resistance levels before the release of the number. The webinar begins half an hour before the release, at 13:00 GMT and is free to attend. The number of seats is limited, so if you’re interested (I enjoyed it!), then I recommend registering to it here.

Further reading: 5 Notes about Non-Farm Payrolls Trading.
posted by

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)