ADP Nonfarm Employment Change is on tap today.
Economical News
USD
Since the beginning of the week, the US dollar has been quietly recovering on the expectation that today's payrolls will be firm. If job growth was indeed greater than 100k, then we expect the dollar to recover further.
Yesterday the USD suffered some pressure and fell against the EUR and the GBP after a weaker than expected Unemployment Claims and factory orders reports. The Labor Department announced that Initial claims for state unemployment insurance benefits jumped to 317,000 in the last week of September from 301,000 the week before. In addition, yesterday the US dollar edged up against the euro during the early afternoon hours after the European Central Bank and Bank of England each held the line on key interest rates as a reaction the US began to get stronger for few hours, but as soon as the Unemployment Claims report and factory orders report were published, the USD return to be pressured down.
Looking ahead to today the most significant news to be released from the US will be the report on employment for the month of September. The previous month's data showed jobs falling, but outlook for September are quite good following a healthy employment subsection in Wednesday's ISM non-manufacturing survey. Many traders forecast the U.S. economy will add 94,000 jobs in September, recovering from the first crash in monthly hiring in four years during the month of August.
Today's non-farm payrolls number will help to determine if at least for the time being, the worst is really behind us because a recovery in job growth means that consumer spending may hold steady, reducing the risk of the US economy falling into a recession.
EUR
The EUR rallied for the first day for the last 4 days, adding 45 points to $1.4149 following an uneventful ECB's interest rate decision and disappointments in US economic data. Yesterday, as was widely expected, the ECB has decided to keep it key interest rate stable at 4% mainly on the basis of the ongoing housing crash and an increasing European pressure to limit economic growth in the EUR area. For the moment the ECB is waiting to witness whether the global financial-market confusion will slow economic enlargement before decide on the future course of interest key rates.
In addition, yesterday The Bank of England decided also to keep interest key rates on hold at a six-year high of 5.75%. The reason for making this act is derived from the same concern which occupies the ECB, and mainly in order waits to see how a global credit crisis will affect the U.K. economy in the mid-term. Speculation that the monetary policy authority would cut interest rates had previously left the currency lower, but the BOE's inaction gave hope that rates would remain stable through coming announcements.
Although there is no news expected today from European markets, today is expected to be quite a volatile day for the EUR as traders attention will be focused on the U.S Nonfarm Employment Change news.
JPY
The recently downtrodden JPY saw a relief against the greenback yesterday, with the USD declining to the 116.70 level. Carry Trades are still the name of the game. The JPY is going through a neutral period as the price action is quite small in the USD/JPY and the trading range appears to be quite tight. Yesterday, the JPY saw little change against the greenback as it drifted from the 115.30 level to 115.60.It would be quite clear that the calm behavior we have seen from the JPY will not continue, as today's packed US calendar will draw the attention of most traders. Today's U.S Nonfarm Employment Change, the Unemployment Rate and the Average Hourly Earnings will no doubt take the USD/JPY out of its latest dead calm.
Technical Analysis
EUR/USD
The pair is consolidating around 1.4115 after the yesterday's rally and is still seeking direction on the 1 hour chart. The 4 Hour chart shows that there is a room for the upntrend and the dailies are sending mixed signals with a slight bearish preference. Testing the 1.4100 level will be a key event for the pair.
GBP/USD
The cable continues to have very choppy trading sessions with no specific clear direction. The volatility range is around 80 pips in width, and the movement is revolved around 2.0340. Both hourlies and dailies are floating on neutral territory, which means that traders must look for the entry point in the 15 minutes chart and try to take short term positions.
USD/JPY
The trading range for the pair is getting tighter every day, and it appears to be looking for the break quite soon. The signals are showing that a break through the 116.00 level will validate the move as bullish, and will probably be strong. A breach through the 115.00 level will still keep the pair in a ranging mode.
USD/CHF
The pair advanced 120 pips in the last 48 hours, and is showing that the momentum is still there although diminishing in the 4 Hour study. The daily chart is showing that a test to the 1.1800 level appears to be very possible, and a breach will send the pair up further to 1.1830, which is a key resistance and a 23.6% Fibonacci level of the 1.2460/1.1630 move.
Wild Card
Crude Oil
The breach through the bottom barrier of the channel has created a bearish momentum that seems to have a lot of steam in it. The 1 Hour chart is showing strong consolidation in the 80.20 level, which mean that the further break down could be close. This could be a great opportunity for Forex traders to get into the downtrend on a very good entry point, as it not completed yet.
Market Trend
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