US ADP Index On Tap To Preview The Nonfarm Payrolls On Friday.
Economical News
USD
It has been a positive day for the greenback as it has been strengthening all across the board in the last 24 hours.According to the releases yesterday,both non-farm productivity and unit labor costs continued to rise in the fourth quarter, but the optimism from these reports was limited by the sharp decline in factory orders and pending home sales. The near future of the Dollar is very much dependent on the labor market which will provide the biggest news event of this month, the Nonfarm Payrolls on Friday. The best preview for the Nonfarm Payrolls is the ADP Nonfarm Employment Change Index which is due today at 13:15 GMT. The ADP's correlation with the NFP has been disputed on many occasions, yet up to date we have no better news event that is more closely affiliated with the Nonfarm sector. The ADP is expected to drop to a 100K after coming in at 126K last month. If indeed the results will come in as expected, and the week will culminate with a slow NFP figure, than it is most likely that we will see some weakness from the US side. Other than that the cost is quite clear until Friday, and traders will pay closer attention to information about the labor market before the end of the week.
EUR
Yesterday was an interesting day in the European market, as the Euro-Zone Retail Sales came in at -0.1% after it was widely expected to come in at -0.3%, in proportion to that difference the market reacted quite calmly. Meanwhile no changes were made to fourth quarter GDP and aside from German factory orders; the Euro-Zone economic calendar is completely empty today. The German Factory Orders M/M for the month of January at 11:00 might generate nice price action as it is expected to make a big jump to 0.4% after coming in at -0.2% last month. As a whole it looks as if the Euro is heading up, not necessarily due to European performance, but due to weak expectancy on the US labor market.
JPY
The JPY has been at the center of everybody's attention last week, as it has made its biggest move since December. It rallied up against all the majors with the biggest move against the GBP, which caused the pair to reach the 121 levels on several occasions. There is no significant news coming from the Japanese markets today, although the JPY is starting to show signs of a rebound in the last 24 hours, as the movement is probably based from the bounce back that occurred after the fall out in the Chinese stock market. The general direction of the JPY is currently quite unclear, as there is discussion whether the amount of carry trades is going to change and thus heavily change the JPY sell-off. Many traders claim that the JPY will first reach the114.00 support level, before making the big move back to 121 levels. The unclear situation is causing many traders to keep away from the JPY until the dark cloud of uncertainty will disappear.
Technical Analysis
EUR/USD
The pair made a small move up overnight and now consolidates around 1.3130. Daily studies show mixed signals at neutral levels, but are over all slightly bearish on a balance. No strong bias is seen, but overbought hourlies favor selling in the short-term.
GBP/USD
There has been a correction of almost 100 pips overnight for the pair that stopped the five day downtrend from the 1.9600 levels. The signals are mixed as the dailies are slightly bullish, and the hourlies are floating in overbought territories.
USD/JPY
Strong indication of a reversal on the daily slow stochastic, as a very strong 115.00 support was created. It looks as if steam has built to push the pair up on the daily point of view. The hourlies are a bit overbought, and as they unwind the pair will probably be pushed further up.
USD/CHF
The price is consolidating near the 1.2230 level after a relatively calm overnight session. The daily charts indicate a bullish cross on the slow stochastic and moderately bullish hourlies support the overall positive notion. Next target price is around 1.2350.
Wild Card
AUD/USD
There is a very strong bullish signal forming on the daily charts that might be very interesting for forex traders. There is a cross on the slow stochastic indicator combined with a daily negative spike on the 0.7700 level. That indicates a strong local support with a strong reversal signal.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
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| Weekly Trend |  |
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| Resistance | 1.3250 | 1.9550 | 118.35 | 1.2400 | 0.7918 | 0.6960 |
| 1.3210 | 1.9440 | 117.40 | 1.2305 | 0.7850 | 0.6902 | |
| 1.3150 | 1.9320 | 116.95 | 1.2280 | 0.7818 | 0.6860 | |
| Support | 1.3080 | 1.9200 | 115.80 | 1.2160 | 0.7620 | 0.6754 |
| 1.3040 | 1.9130 | 114.90 | 1.2090 | 0.7588 | 0.6690 | |
| 1.2950 | 1.8900 | 114.05 | 1.2000 | 0.7505 | 0.6660 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 07/03/2007 | 11:00 | EUR | German Factory Orders seasonally adjusted | (MoM) (JAN) | -0.2% | 0.4% |  |
| 07/03/2007 | 13:15 | USD | ADP Employment Change | (FEB) | 126K | 100K | |