Forex technikal and fundamental analysis: Forex Crunch Forex Daily Outlook

May 5, 2010

Forex Crunch Forex Daily Outlook – May 5 2010

Forex Daily Outlook – May 5 2010

Posted: 04 May 2010 02:00 PM PDT

U.S. ADP Non-Farm Employment Change is looking good, The ISM Non-Manufacturing PMI is also on the rise and U.S. Federal Reserve Bank of Boston President Eric Rosengren delivers a speech. These items together with more good news, await us today.

In the US, ADP Non-Farm Employment Change, estimates a rise of 29000 in the number of employed people in the U.S. which is really good news for the American dollar after the drop of 23000 from last month. We still need to see the results of the Non-Farm Employment Change report on Friday to confirm this positive notion.

Later in the US, The Institute for Supply Management Non-Manufacturing PMI measuring the Level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry is expected to rise from 55.4 points to 56.2 another good sign for the U.S. market.

More from the US, Federal Reserve Bank of Boston President Eric Rosengren delivers a speech titled “Understanding the Housing Collapse: What is to Blame and What can be Done” at the Rappaport Institute of Harvard University, in Boston and at Money Marketeers Club, in New York. This will probably influence monetary policy and interest rates.

Also in the US, Crude Oil Inventories released weekly will probably remain around 1.9M.

Finally in the U.S., Job Cut Announcements will probably remain in the area of -55.0% though has limited short-term correlation with overall labor conditions.

In Europe, Retail Sales measuring change in the total value of inflation-adjusted sales at the retail level is expected to rise from -0.6% to 0.1.

More from Europe, Final Services PMI showing the level of a diffusion index based on surveyed purchasing managers in the services industry is also expected a small mount from 55.5 to 55.6 points which will affect the Euro.

Also in Europe, Deutsche Bundesbank President Axel Weber speaks about financial system reform at the German Savings Bank Event, in Stuttgart and Berlin. This may reveal clues concerning future monetary policy.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis.

In Great Britain, Halifax Bank of Scotland (HBOS) House price index, indicating the change in the price of homes financed by HBOS, is expected to go down from 1.1% to 0.6%, a bit of slowing down in the housing industry and a drop in the total value of new credit issued to consumers this month from 2.1B to 2.0B, may correlate to Pre-election uncertainty.

More in Great Britain, Construction Purchasing Managers’ Index showing the Level of a diffusion index in the construction industry is expected a slight increase from 53.1 points to 53.5 points warming up towards elections.

Read more about the Pound in the GBP/USD forecast.

In Australia, Good news for Australia’s construction activity; Building Approvals report released monthly shows an expected rise from -3.3% to 0.9% in the umber of new building approvals issued.

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

In New Zeeland, Employment Change released quarterly, shows an expected positive rise of 0.3% in the number of employed people since the drop 0f -0.1% last to 0.3% and the total rate of unemployed in New Zeeland is expected to remain 7.3%.

That’s it for today. Happy forex trading!

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Strong Recovery? Nonfarm payrolls preview

Posted: 04 May 2010 06:27 AM PDT

Yet again, expectations are high from the upcoming Non-farm payrolls release. Great expectations can turn into great disappointments, but this seems like a win-win situation for the greenback. Here’s what to look for from this release of the “king of forex”.

According to economists’ estimations, American Non-Farm Payrolls are predicted to show another month of strong gains – 200K. If this is realized, it will be the second month in a row of gains reported in the initial release.

Until last month, we’ve only seen gains in revisions – initial releases, for the month that just ended, were negative. Last month’s gain, 162K, fell below expectations of a 185K gain, but the fact that a job gain was seen + low market volume at that time boosted the dollar. There were doubts about the figures – the government showed a gain of 123K in the private sector, while the figure release by ADP two days beforehand showed a loss of jobs.

This month’s release is expected to remove these doubts. Also now, the decennial American census will contribute to gains in public jobs. But these gains are expected also in the private sector. Large companies such as General Electric are hiring. This is also backed by purchasing managers’ indices that have risen in all sectors. On the other hand, note that weekly unemployment claims have been OK, but they didn’t shine. Jobless claims proved to be a good indicator for the NFP

The talk about a sustainable economic recovery will become stronger on such a score, and so will talks about a rate hike in the US. Higher employment will eventually turn into rising prices and a need to tackle inflation.

Forex market reaction

If you’re new to fores trading, note that this is very volatile and risky event. Please read my 5 notes for Non-Farm Payrolls trading.

Regarding EUR/USD, this is a win win situation for the dollar – the deepening debt issues in the old continent, as seen recently in Spain, weaken the Euro. A bad Non-Farm Payrolls score won’t really help the pair. Also the Pound is vulnerable to the Euro-zone’s debt issues, and will probably follow the Euro’s lead. But this depends on the election results as well.

The Aussie, that enjoyed yet another rate hike, and the Canadian dollar, that will get its own job figures 90 minutes before the NFP, can rise if payrolls are weak. But any result above 200K will make these currencies bow as well.

The American unemployment rate will probably remain unchanged at 9.7%. A drop up to 9.5% or a rise to 9.9% won’t make a difference – the focus will still be on the NFP. A fresh rise to 10% or higher will be alarming, but that is unlikely. A drop under 9.5% isn’t likely either.

Following the event

I highly recommend following this event, definitely the most important release for forex traders with this live trading webinar with Alex Kazmarck of SpotEuro. His sessions were fascinating in the previous releases.

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If you’re not on Currensee, the webinar costs $10, but it’s free if you use this link.

For those of you trading this event, good luck!

Disclosure: I’m affiliated with Currensee.