Forex Tips & Daily Analysis

Economical News

USD

Yesterday the USD extended its gains across the board after a string of positive US economic data. Non-Farm Productivity came in at 1.7% beating the expected figure of 1.0%. Weekly jobless claims fell unexpectedly to 305K, the lowest since January, from last week's figure of 326K. Also the ISM Non-Manufacturing index, which measures the activity level of purchasing managers in the services sector, accelerated more than expected in April reducing the likelihood of a Federal Reserve interest rate cut. These numbers indicate solid growth and contained inflation which are essential ingredients for a strong economy. On the back of this positive news the EUR dropped to as low as 1.3550 and the sterling fell to 1.9858 versus the dollar. The dollar has now been rising for 3 straight days its longest rally in two months

Today all attention will be focused on the Non-Farm Payrolls report which will be released at 13:30 GMT and is expected to drop from 180K to 107K. A weak outcome could revive speculation of an early rate cut from the Fed which would undermine the dollar. On the other hand if the NFP report comes in above 125K which is unlikely due to the weak ADP report and the Unemployment Rate releases inline with expectations we could see the beginning of a reversal for the Greenback and it may start to head towards the 1.35 level against the EUR. In either case traders should take the cautious approach as the NFP report could cause a great deal of volatility

EUR

Yesterday the only news coming out of the Eurozone was the Producer Price Index which released inline with expectations at 0.3% and manufacturing PMI which fell short of expectations but remained at high levels indicating continuing expansion. The strength of the EUR is raising concerns as it is retarding growth and starting to have an effect on inflation but European officials are maintaining their stance that the strong currency will not drag down exports. It could also influence the ECB's decision of whether the next EU rate hike will be beyond the 4% level, so more cautious comments are expected from the ECB President Trichet at next week's press conference.

The news events to be released today from the European markets are the services PMI which is forecast to be slightly stronger at 57.6 but it may fall short of the expected figure as a result of yesterday's weaker manufacturing PMI. Eurozone retail sales are forecast to come in at 2.2% which is much higher than last months figure of 0.3%. The EUR should continue range trading against the majors but much depends on the US NFP report which may finally halt the EUR's bullish trend.

JPY

Carry trades are still the name of the game as the Dow continues setting record highs causing the JPY to weaken against high yielding currencies. The dollar remains above the 120 level against the JPY, and the EUR rose to a new all time high at 163.59.

Trading will remain thin as the Japanese and Chinese financial markets remain closed today. Most price movement on JPY pegged currencies will be derived from Europe and the US. The news events that came out of Japan this week did not leave a mark on the market due to low liquidity and lack of players. With the US NFP report being released today most of the trader's attention will be focused away from the JPY so it is expected to continue on its bearish trend.

Technical Analysis

EUR/USD

After a calm overnight, the pair seems to be continuing the local downtrend it has been establishing. The daily charts are bullish with hourlies sliding between bearish and neutral

GBP/USD

Low price action for the pair in the last trading session as the pair is establishing a new local low. Daily charts are bullish as the hourlies unwind to confirm. Buying on dips might be a preferable strategy.

USD/JPY

A very distinct uptrend is forming on the 4 hour chart in the shape of a classic tight channel. The pair seems to have no reason to stop as the RSI and slow stochastic soundly confirm. Next target price is 121.00.

USD/CHF

The pair now consolidates around 1.2150 after a relatively steady increase from the 1.2000 low. Dailies are signaling that the direction is definitely up but is contradicted by the hourlies which give mixed signals. It looks as if the pair will probably make a correction before moving on with uptrend into the 1.2200 levels.

Wild Card

NZD/USD

It looks as if a very clear downward channel is forming on the 4 hour chart, as the pair now floats on the upper level of it. This gives forex traders a great opportunity to get into the downtrend in the right direction and in a good entry price for a short position.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3662	2.0000	121.23	1.2265	0.8291	0.6893
	1.3615	1.9948	120.87	1.2218	0.8250	0.6862
	1.3573	1.9896	120.46	1.2171	0.8210	0.6831
Support	1.3525	1.9829	120.08	1.2134	0.8166	0.6820
	1.3483	1.9790	119.70	1.2108	0.8128	0.6775
	1.3444	1.9762	119.34	1.2070	0.8100	0.6752

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
05/04/07	09:00	EUR	Services PMI	Apr	57.4	57
05/04/07	10:00	EUR	Retail Sales m/m	Mar	0.3%	2.2%
05/04/07	13:30	USA	Nonfarm Employment Change	Apr	180k	107k
05/04/07	13:30	USA	Unemployment Rate	Apr	4.4%	4.5%
05/04/07	13:30	USA	Average Hourly Earnings m/m	Apr	0.3%	0.3%
05/04/07	15:00	CAD	Ivey PMI	Apr	67.3	57.5