Greenback on the move on the brink of vital news reports.
Economical News
USD
It was an exciting day yesterday as traders awaited the releases of the Q1 GDP revision, Chicago Purchasing Managers Index (PMI), House Price Index, construction spending report and the weekly jobless claims figures. The signals were mixed as the GDP dropped from 1.3% to 0.6% and the Chicago PMI went up above expectations to 61.7 and in general no massive price movements were seen. This will probably not be the case today, as we have a very important trading day ahead, full with major news event and dominated by the release of the Nonfarm Payrolls at 12:30 GMT. The Unemployment rate is widely expected to remain unchanged at 4.5 % and the Average Hourly Earnings are expected to go up a bit to 0.3%. The Core PCE Price Index is expected to go up to 0.2% from the flat 0.0% on last month. The ISM Manufacturing Index which is also considered to be a Hugh market mover is expected to go down a bit to 54.0 and will probably not shake the market too much as most of the focus will be on the NFP release. There are high expectations as to what the Change in Nonfarm Payrolls will be, as the consensus stands around 135K, which is much higher then last months' 88K, and if the data will be released inline with expectations, we might see a massive positive move for the Greenback. High volatility is the name of the game today, and traders will be looking to get on the wagon if indeed a positive USD move will occur.
EUR
It was a positive day for the EUR yesterday after the Euro-Zone Consumer Confidence was released at a negative rate of -1, yet higher than the expected -4. This caused the EUR to go up to 1.3450 against the USD and to 163.80 against to JPY.
There are several important news releases coming from Europe today starting with the German Retail Sales 6:00 GMT which is expected to come back to positive grounds of 1.0% after a previous figure of negative -0.4%. A bit later at 7:55 GMT the German Manufacturing PMI is expected to be released at a 57.3 which is a small increase from last months' 57.0. It is quite clear that most of the market price movement will not come from the European side of the globe, as all eyes will be directed to the US market and its many important releases headed by the release of the Change in Nonfarm Payrolls.
JPY
The Japanese currency is growing weaker everyday as carry trades continue with full steam, taking the JPY to 121.80 against to USD and 241.10 against the GBP. The Average Cash Earnings dropped massively to -0.7% and the Housing Starts came in a bit higher than expected but still pretty low at -3.6%. It looks as if we are not going to see a rate hike from the Bank of Japan, at least not in June. As for today there are no major news releases expected, and traders will probably keep out of JPY trading and focus on USD trading as most of the Price action will be US centered.
Technical Analysis
EUR/USD
In the last 12 H this pair was trading in an extremely tight channel and repeated attempts to breach the 1.3462 R level (Fibonacci) and the S 1.3449 (Fibonacci) which are both marked as Fibonacci retracement levels. A breach of one of these levels may indicate
the establishment of the next significant trend, traders be aware .
GBP/USD
On the daily chart we are seeing a mild bearish channel which is starting to imply an upcoming breakout when the last "head" is above the others. Also a head & shoulders pattern is forming and if completed, a sharp bearish trend is expected .
USD/JPY
On the daily chart we can see a bullish channel which began two months ago and there is still room to maintain this progress. The 2 H implies an upcoming reversal trend if the high Bollinger band will be breached.
In this case, going short might be the preferable strategy today.
USD/CHF
Range trading is expected as this pair is sailing through calm waters. Indicators are neutral and traders are seeking the next breakout which has not shown any sign yet.
Wild Card
AUD/USD
On the 4 H chart it can be observed that after a major bullish trend an upcoming reversal is expected when RSI (91) and Slow Stochastic crossing at (91) which implies a clearly overbought situation.
A Doji is also observed on this chart which is strengthening the fact that a reversal is expected on this forex pair.
It seems that going short would be the preferable strategy to stick to.
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 | 1.3559 | 1.9932 | 122.92 | 1.2385 | 0.8415 | 0.6896 |
| 1.3528 | 1.9875 | 122.65 | 1.2348 | 0.8378 | 0.6868 | |
| 1.3474 | 1.9830 | 122.25 | 1.2310 | 0.8335 | 0.6826 | |
| Support | 1.3412 | 1.9745 | 121.45 | 1.2232 | 0.8255 | 0.6756 |
| 1.3372 | 1.9710 | 121.04 | 1.2200 | 0.8211 | 0.6725 | |
| 1.3330 | 1.9670 | 120.71 | 1.2145 | 0.8170 | 0.6690 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 06/1/07 | 12:30 | USD | Nonfarm Employment Change | m/m | 88K | 135K |  |
| 06/1/07 | 12:30 | USD | Unemployment Rate | 4.5% | 4.5% |  | |
| 06/1/07 | 12:30 | USD | Core PCE Price Index | m/m | 0.0% | 0.2% | |
| 06/1/07 | 12:30 | USD | Personal Spending | m/m | 0.3% | 0.4% | |
| 06/1/07 | 14:00 | USD | ISM Manufacturing Index | 54.7 | 54.0 | | |
| 06/1/07 | 14:00 | USD | ISM Manufacturing Prices | 73.0 | 73.0 |  | |
| 06/1/07 | 14:00 | USD | Consumer Sentiment (r) | 88.7 | 88.7 | | |
| 06/1/07 | 21:30 | USD | Alan Greenspan Speaks | |