US Nonfarm Payrolls on Tap, Large Volatility Is Expected.
Economical News
USD
After a relatively stable week regarding price movement, we are expecting the biggest news event of the week - The Nonfarm Payrolls. Although its reputation as the biggest market shaker has declined lately, very interesting movement can be expected today, mostly because uncertainty is the name of the game here. This past week, traders saw the negative release of the ADP index, where its correlation with the NFP is ever questioned. This time around, traders are proving that they disagree with correlation theories. Although the ADP came in very week at 57K, the market didn't show much excitement nor did it show any downward movement to the USD. The Jobless Claims was also accepted with certain apathy after coming in at 328K. The estimates of the 80 economists surveyed by Bloomberg range from 38k to 165k with a median of 95k and an average of 98k. Such a wide range of forecasts indicates that even the experts don't really know what to expect.
What could be said is that a reading below 80K would be quite devastating for the USD and one above 110K would keep it on stable ground. It is not a secret that the common notion is slightly pessimistic and as it appears on paper traders will in fact be expecting bad results. It is also pretty clear that today's report will generate massive volatility, and probably deliver the USD's next move.
EUR
Although the ECB raised the European Rates by 0.25 to 3.75%, the move was very much expected and created little price movement in the European markets. What did cause the market to react was the speech made by ECB President Trichet all throughout the afternoon. Trichet calmed down his “Hawkish” notion on the economy and indicated that interest rates are currently “moderate” rather than “low” and confirmed that the word “vigilance” will not be used in his prepared statement. The shift in tone is likely in response to the recent volatility in the global equity markets as well as their outlook for softer inflation in the next Four months.
The Bank of England kept the British interest rates unchanged at 5.25. That was also in line with expectations and no major moves were seen. Traders will be waiting for the minutes to get the bank's monetary policy, since it does not publish it when rates remain unchanged.
No major European news is expected today, as most of today's action will come from the US market, and the NFP release.
JPY
The uncertainty around the Japanese markets create an almost impossible trading behavior for the currency that was once very monotone. The USD/JPY is going through extremely choppy sessions, and we suddenly see 200 pips movements in a very short period of time. Although no major news was released in the Japanese market yesterday, we saw an abnormal movement with no valid explanation as to what caused it where the marker increased from 116.00 to 117.50. As for now the near future of the Yen is quite unclear, and until some general direction will appear, JPY trading is recommended only for the brave hearted.
Technical Analysis
EUR/USD
The pair is consolidating in the 1.3150 zone. Daily signals are mixed with a slight bullish indication. The hourlies are touching overbought territory. It could be wise to stay out of the market until a clearer direction will be known.
GBP/USD
The pair has crashed more than 250 pips in the last three days, and is now signaling a bounce back. The pair now floats around 1.9300, and it could be wise to look for dips, and establish long positions.
USD/JPY
The daily charts are extremely bullish, as the pair started correcting massively from the 115.00 support. The hourlies are quickly unwinding from overbought levels and indicating that longs are most probably the right way to go.
USD/CHF
Daily studies are moderately bullish, and are pointing to the 1.2350 zone. The notion is supported by bullish hourlies which indicate that the correction up still has some steam in it.
Wild Card
AUD/USD
A very clear channel has been created on the 4 hour chart, allowing forex traders the opportunity to jump into the local uptrend until the pair reaches the upper levels of the channel. Although the general direction of the channel is down, this is a perfect opportunity for swing traders to take 40-60 pips in a mid range trade.
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 | 1.9563 | 119.20 | 1.2400 | 0.7946 | 0.6960 |
| 1.3217 | 1.9452 | 118.44 | 1.2329 | 0.7850 | 0.6902 | |
| 1.3192 | 1.9348 | 117.73 | 1.2289 | 0.7815 | 0.6830 | |
| Support | 1.3121 | 1.9283 | 116.95 | 1.2242 | 0.7756 | 0.6789 |
| 1.3086 | 1.9205 | 114.90 | 1.2180 | 0.7705 | 0.6694 | |
| 1.3033 | 1.9130 | 114.05 | 1.2098 | 0.7678 | 0.6649 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 09/03/2007 | 7:00 | EUR | German Trade Balance | 10.3B | 14.3B |  | |
| 09/03/2007 | 09:30 | GBP | ndustrial Production | M/M | -0.1% | 0.2% |  |
| 09/03/2007 | 09:30 | GBP | Manufacturing Production | M/M | 0.2% | 0.2% |  |
| 09/03/2007 | 13:30 | USD | Nonfarm Employment Change | 111K | 100K | | |
| 09/03/2007 | 13:30 | USD | Unemployment Rate | 4.6% | 4.6% | | |
| 09/03/2007 | 13:30 | USD | Average Hourly Earnings | M/M | 0.2% | 0.3% | |
| 09/03/2007 | 13:30 | USD | Trade Balance | -61.2B | -59.5B | | |
| 09/03/2007 | 17:30 | USD | Fed Governor Bies Speaks | | |||
| 09/03/2007 | 18:30 | EUR | Fed Governor Kohn Speaks | | |||
| 09/03/2007 | 20:30 | USD | Fed Governor Kroszner Speaks | |