The Market Calms Down After Friday's Nonfarm Payrolls.
Economical News
USD
On Friday, we saw the release of the Nonfarm Payrolls which came out stronger than the expected 135K at 157K. The strong figure immediately triggered high levels of USD volatility, especially against the EUR, making it almost impossible to trade the NFP session. USD/JPY behavior was much calmer, as the pair barely reacted to the extremely high release. The ISM Manufacturing on Friday was also released above expectations of 54.0 at 55.0 which helped to send the USD up, but only at the local level, as it was not enough to keep it high for a long time due to fact that the rest of the news releases came out weaker than expected. Core PCE Price Index came out at 0.1 which was lower than the expected 0.2. Personal Income Plummeted to negative -0.1% as Personal Spending increased to 0.5% creating a very wide gap between them which means that it's becoming harder for consumers to spend more with lower income levels.
As for today, the US calendar is empty and seems to be very light for the rest of the week. We should expect US Retail Sales, PPI, and CPI starting on Wednesday.
It looks as if a slight positive wind is blowing at the USD's and it remains to be seen whether it will continue as the rest of the week unfolds.
EUR
The EUR was one of the only currencies that could sustain the blow taken from the release of the Nonfarm Payrolls and came back exactly to where it started prior to the release. What caused the strong EUR behavior was probably the extremely strong German Retail Sales release which was expected to get out of negative territory of -0.1% into positive 0.1% and instead soared to 2.6%. Today the Euro-Zone PPI is expected be released at 10:00 GMT with a consensus of 0.3%. The highlight of this coming week will surely be the ECB Rate decision which is widely expected to hike 0.25% to 4.00%. If indeed the ECB will hike the rate we expect local appreciation for the EUR this week.
JPY
Carry trades continue with full steam as the JPY is trading at record levels against most major currencies. The JPY is traded at 242.00 against the GBP, 164.10 against the EUR, and 122.00 against the Greenback, very impressive figures on any scale. The Japanese market started this week with some positive figures as the JPY Monetary Base went up to -5.7% from a previous figure of -12.2, and the JPY Capital Spending went down from 16.8% to 13.6%. As for the rest of this week, there is no significant news events expected to be released from the Japanese market, and carry trades will probably continue to take the JPY lower to the next record low.
Technical Analysis
EUR/USD
The pair is consolidating around 1.3450 which is a very important key level and a low point in the recent downtrend. The Daily charts are bearish, as the hourlies support the notion that the continuation of the downtrend is on the way. A correction up might happen but if a break through 1.3450 is made, then the right direction is certainly down.
GBP/USD
After touching the 1.9770 bottom on Friday, the pair seems to be forming an uptrend and is now floating around 1.9840. The hourlies are bullish, and the dailies support with the RSI indicating that the momentum is growing for the trend to grow stronger. The next target price is around 1.9920.
USD/JPY
The pair is peaking at 122.05 and is in the midst of a very strong uptrend which was initiated at the beginning of March. As for now all indicators support the bullish notion, together with bullish signals from the Daily studies. The hourlies are a bit overbought which indicates that buying on dips might be a preferable strategy today.
USD/CHF
There is an upwards channel pattern forming on the daily chart and the pair is now floating at the upper level of it. It looks as if the pair might test the bottom level at 1.2260 before the uptrend continues. If a break will occur on either side of the channel, we expect an additional 80 pip move.
Wild Card
CAD/CHF
After a very impressive uptrend that started three months ago, the pair shows no signs of a stop. There is a price consolidation on the 1.1610 level, which provides forex Forex traders with the opportunity of a great entry point for a swing trade. It looks as if the next price target is 1.1700.
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 | 2.0000 | 122.92 | 1.2385 | 0.8415 | 0.6896 |
| 1.3528 | 1.9935 | 122.65 | 1.2348 | 0.8388 | 0.6858 | |
| 1.3478 | 1.9888 | 122.40 | 1.2320 | 0.8356 | 0.6816 | |
| Support | 1.3408 | 1.9800 | 121.72 | 1.2262 | 0.8297 | 0.6746 |
| 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 |
|---|---|---|---|---|---|---|---|
| 06/4/07 | 9:30 | EUR | UK Construction PMI | May | 59.8 | 59.5 |  |
| 06/4/07 | 10:00 | EUR | PPI | m/m | 0.3% | 0.3% | |
| 06/4/07 | 15:00 | USD | Factory Orders | m/m | 3.5% | 0.7% | |