Forex Tips & Daily Analysis

Economical News

USD

There is a very important day ahead of the Greenback today, as all eyes will be focusing on the release of the change in Nonfarm Payrolls. Although the USD showed moderate signs of a local strengthening, the majority of news releases came out quite negative.

Yesterday, Factory Orders came in much weaker than expected at 0.6% with a forecast of 1.2%. Wednesday showed traders that the US economy is nowhere near ready for recuperation as the ISM Manufacturing dropped hard to 53.8, the ADP Nonfarm Index dropped to a 4 year low of ridicules 48K and the Sub-Prime crisis is not showing any signs of healing. The Unemployment Claims which was released yesterday, just added to the ongoing glooming picture of the USD, as it was released at a lower than expected 307K with a forecast of 315K.

The expectations for the NFP release are currently standing at 135K, which at the moment looks way ahead of the real situation in the labor market. It is commonly thought that even if it will indeed be released somewhere around that figure the positive effect on the USD will be limited as it takes a bit more than a relatively strong NFP to bring the back economy on its feet, especially in light of the escalating equity market concerns.

The ISM Non Manufacturing Index is also expected to be released together with the Payrolls figure, but is expected to generate small interest as it would be overshadowed by the main event of this trading day. It appears that no matter what figure we see tomorrow or what currency behavior will prevail the big picture is not so bright for the greenback at least at a medium range time frame.

EUR

The ECB has decided to keep the interest rate unchanged at 4.00% yesterday, as was widely expected by traders all around the world. ECB president Trichet used words such as “strong vigilance” to send a very clear signal that a rate hike is very much expected next month. The Bank of England also decided to leave the interest rate unchanged, which was completely inline with expectations and there was no surprise news conference with regards to future policy.

As for today, the Swiss CPI is expected to be released today and will probably jump into negative territory after coming in at 0.1%. Also expected to be released is the UK Services PMI which is forecasted to come in at 57.5, which is quite close to last month's 57.7. All of these news events will probably have minimum effect on price movement as most of the attention will be focused on the US market and the Nonfarm Payrolls release.

JPY

There was no significant news released from Japan yesterday or today but the JPY lost some ground against the majors on the back of a late rally in US equity markets yesterday. JPY direction in the near future also greatly depends on today's NFP report from the US because if the data releases soft then this will increase risk aversion thereby fuelling a carry trade unwind. The problems in the US housing and credit sectors have been the major factors responsible for the recent carry trade unwind so if today's Payrolls report gives indication of worries in the employment sector then the carry trade strategy may be out the game for a while. So if the NFP report releases weak as widely expected then the JPY will strengthen all across the board particularly against the high yielding market currencies.

Technical Analysis

EUR/USD

The pair has been ranging in the past few days and it showed no distinct direction. The daily studies are showing bullish signals and the hourlies are currently neutral. A preferable strategy might be to wait for the hourlies to deliver a positive signal, and look for a good entry point for a long position.

GBP/USD

The cable is having difficulties breaking through the 2.0350 violently. If the attempts will continue to fail, we will see the continuation of the downtrend, but if it will succeed, it will validate the correction back to the 2.0500 levels again.

USD/JPY

There are strong bullish signals starting to come from the pair, after it could not break through the 117.50. This is starting to become a very strong support level which will probably not be broken in the near future. The dailies are bullish and hourlies support the bullish notion. Buying on dips might be preferable here.

USD/CHF

The pair is trading at a tight range for quite a while now, and is showing that the 1.1950 level is a stronger support than what was thought initially. There is a distinct bullish cross forming on the daily slow stochastic, and it looks as if a very good entry point for a long position is starting to form.

Wild Card

Crude Oil

The upwards channel formation is becoming clearer than ever especially now that the pair is touching the bottom end of it after a sharp correction. This provides Forex traders with an excellent entry point for a long position and an opportunity to jump in on a very healthy uptrend that has been going on for quite a while now.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3510	1.9945	124.14	1.2514	0.8534	0.6843
	1.3476	1.9899	123.78	1.2495	0.8500	0.6810
	1.3400	1.9849	123.50	1.2423	0.8478	0.6767
Support	1.3315	1.9779	122.99	1.2360	0.8400	0.6700
	1.3265	1.9753	122.50	1.2312	0.8367	0.6682
	1.3240	1.9625	122.23	1.2289	0.8334	0.6653

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
08/3/2007	08:30	GBP	Services PMI		57.7	57.5
08/3/2007	12:30	USD	Nonfarm Employment Change		132K	135K
08/3/2007	12:30	USD	Unemployment Rate		4.5%	4.5%
08/3/2007	12:30	USD	Average Hourly Earnings	m/m	0.3%	0.3%
08/3/2007	12:30	CAD	Building Permits	m/m	21.4%	-9.0%
08/3/2007	14:00	USD	Non-Manufacturing Index		60.7	59.5
08/3/2007	14:00	CAD	Ivery PMI		67.4	58.0