Forex Tips & Daily Analysis

Dollar Gains Ahead of Non Farm Employment Data.

The USD was higher against its major counterparts Wednesday, heading toward its highest levels versus the EUR since last summer, following the release of better than expected economic data from the U.S.

Economical News

USD

The USD rallied against its major currency counterparts Wednesday following the release of stronger than expected economic data. The greenback erased overnight losses against the EUR after the release of a better than expected ADP Non Farm Employment report in January while the ISM Non-Manufacturing PMI showed expansion in service sector activity in the world's biggest economy.

The ICE Dollar Index, which tracks the performance of the greenback against a trade-weighted basket of currencies, was at 79.360 from 79.000. the better than expected economic data boosted confidence ahead of the key Non Farm Employment report Friday, renewing expectations that the Federal Reserve will raise interest rates sooner than previously forecast. The EUR/USD was also pressured by revived concerns about the fiscal health of Greece as well as Portugal. The greenback also pushed to a two week high against the Yen.

Markets are now focused on the January Non Farm Payroll Data, due out Friday. The Labor Department is expected to show that the U.S. economy added 20,000 jobs last month, which would be the biggest gain since 2007. Today, the Unemployment Claims are due to be released at 13:30 GMT. This release might prove quite volatile for the USD, particularly if the result contrasts with Friday's expectations.

EUR

Renewed Concerns that Greece's fiscal problems will spread to other Euro-Zone nations pressured the EUR Wednesday. There are also concerns regarding Portugal and Spain having fiscal difficulties which are adding to the pressure. Wednesday afternoon in New York, the EUR was at $1.3904 from $1.3965 late Tuesday and at 126.46 Yen from 126.20 Yen. The U.K. Pound slipped to $1.5908 from $1.5984.

The common currency rose higher during the European trading session after the European Union offered a qualified endorsement of Greece's plans to close its budget gap. However, it later slid back to trading around a seven month low against the Dollar as better than expected economic data released during the NY session boosted demand for the Dollar over its riskier counterparts.

Today, both the European Central Bank and Bank of England hold their policy meetings. Traders should pay close attention to the U.K's Asset Purchasing Program and whether U.K. officials decide on continuing purchasing assets to support the economy.

JPY

The Japanese Yen gained versus 13 of its 16 major counterparts as reports in today's early trading showed Australian retail sales unexpectedly shrank and New Zealand's jobless rate rose. The Yen rose to 126.21 per EUR from 126.42 yesterday in New York yesterday. It gained 0.6% to 63.53 against New Zealand Dollar, and climbed 0.2 % to 80.16 versus the AUD.

The New Zealand Dollar tumbled against major counterparts following the release of the 4th quarter unemployment rate which showed unemployment in New Zealand increased sharply in the final quarter of 2009, reaching its highest level in more than a decade.

Technical Analysis

EUR/USD

This pair is giving off moderately strong bullish signals. The 4-hour Stochastic (slow) is showing a fresh bullish cross, indicating an impending upward price movement. The daily RSI also appears to be in the over-sold territory and cascading upward, suggesting strong bullish momentum. Going long on this pair may be a wise move today.

GBP/USD

A fresh bullish cross has formed on the 4-hour Stochastic (slow) for this pair. As the price has just touched the lower border of the 4-hour Bollinger Bands, there may also be an indication that it will retrace itself back towards the upper border, indicating bullish pressure on this oft-traded currency. Going long could be a profitable tactic today.

USD/JPY

The technical indicators on this pair don't seem to be giving off much indication of direction. However, the pair is range-trading in a bullish channel and has just touched topped a recent peak, suggesting that the price may experience a downturn as it continues floating within this range. Buying on lows and selling on highs within this range may be a good choice for the rest of this week.

USD/CHF

This pair has just witnessed a bearish cross form on the 4-hour Stochastic (slow) and may soon move in a downward direction. The daily RSI also has the pair just about to exit the over-bought territory, suggesting downward pressure. Going short on this pair would probably be the best strategy in today's trading.

Wild Card

Gold

It seems as though a new bullish cross has formed on the 4-hour Stochastic (slow) for the price of Gold. This may indicate that an upward price movement is imminent. The daily MACD/OsMA also shows a bullish cross, supporting the notion that upward pressure exists on this commodity at the technical level. Forex traders don't want to miss out on a possible opportunity to make fast profits by jumping in on this predictable price movement in one of the world's most exciting and tradable commodities.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3970	1.6080	91.90	1.0693	0.8899	0.8828
	1.3940	1.6050	91.60	1.0663	0.8869	0.8798
	1.3910	1.6020	91.30	1.0633	0.8839	0.8768
Support	1.3846	1.5860	90.67	1.0569	0.8775	0.8704
	1.3816	1.5830	90.37	1.0539	0.8745	0.8674
	1.3786	1.5800	90.07	1.0509	0.8715	0.8644

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2010-02-04		GBP	MPC Rate Statement		*	*
		MPC Rate Statement This statement is issued by the Monetary Policy Committee (MPC) to communicate with investors about the reasons for their recent interest rate decisions, as well as to discuss the strength of the nation's economy.
2010-02-04		USD	Loan Officer Survey		*	*
		Loan Officer Survey It's correlated with spending and confidence - rising debt levels are a sign that lenders feel comfortable issuing loans, and that consumers and businesses are confident in their financial position and eager to spend money
2010-02-04	00:30	AUD	Building Approvals	m/m	5.9%	-0.2%
		Building Approvals This report is a measure of impending construction activity. It is a significant indicator since the first step in beginning a new construction project is the acquisition of permits granting the approval to do so.
2010-02-04	00:30	AUD	Retail Sales	m/m	1.4%	0.3%
		Retail Sales This report is a measure of the change in the total value of retail sales. Positive figures indicate economic growth.
2010-02-04	07:15	CHF	Trade Balance		2.14B	2.33B
		Trade Balance This report measures the difference between imported and exported goods and services. A positive number indicates the country is exporting more goods than it is importing. A country with a growing positive trade balance may see their currency strengthen as a result.
2010-02-04	09:00	GBP	Halifax HPI	m/m	1.0%	0.9%
		Halifax HPI This is a measure for the change in the price of homes financed by HBOS.
2010-02-04	11:00	EUR	German Factory Orders	m/m	2.8%	0.2%
		German Factory Orders This indicator presents a measure of the value of new orders placed with domestic manufacturers for durable and non-durable goods. It typically has a small impact as the Durable Goods Orders indicator report already signified the primary results on this sector of the economy.
2010-02-04	12:00	GBP	Asset Purchase Facility		200B	200B
		Asset Purchase Facility Measures the total value of money the Bank of England will produce and use to purchase assets in the open market.
2010-02-04	12:00	GBP	Official Bank Rate		0.50%	0.50%
		Official Bank Rate This indicator represents the recent interest rate decision made by the Bank of England's (BoE) 9 member Monetary Policy Committee (MPC). Interest rates are a primary determinant of the value of a nation's currency.
2010-02-04	12:45	EUR	Minimum Bid Rate		1.00%	1.00%
		Minimum Bid Rate The Minimum Bid Rate represents the recent interest rate decision made by the 6 member European Central Bank (ECB) board as well as the 16 central bank governors from each member of the Euro-Zone regional economy. Interest rates are a primary determinant in the value of a currency.
2010-02-04	13:30	CAD	Building Permits	m/m	-3.2%	2.7%
		Building Permits This report is a measure of impending construction activity. It is a significant indicator since the first step in beginning a new construction project is the acquisition of permits granting the approval to do so.
2010-02-04	13:30	EUR	ECB Press Conference		*	*
		ECB Press Conference The European Central Bank will be holding a conference on various economic and financial issues. These conferences typically generate higher trading volumes as traders speculate about future monetary policy decisions.
2010-02-04	13:30	USD	Unemployment Claims		472K	461K
		Unemployment Claims An indicator which measures the number of individuals who filed for unemployment insurance with the government for the first time during the past week. This is one of the earlier releases of economic data.
2010-02-04	13:30	USD	Prelim Nonfarm Productivity	q/q	8.1%	5.7%
		Prelim Nonfarm Productivity Annualized change in labor efficiency when producing goods and services, excluding the farming industry;
2010-02-04	13:30	USD	Prelim Unit Labor Costs	q/q	-2.5%	-2.3%
		Prelim Unit Labor Costs Annualized change in the price businesses pay for labor, excluding the farming industry
2010-02-04	15:00	CAD	Ivey PMI		48.4	52.3
		Ivey PMI The Ivey Purchasing Manager's Index (Ivey PMI) measures the level of purchasing activity for all-industry purchasing managers. A release above 50.0 represents industry expansion; below 50.0 signals a contraction.
2010-02-04	15:00	USD	Factory Orders	m/m	0.6%	0.7%
		Factory Orders This indicator presents a measure of the value of new orders placed with domestic manufacturers for durable and non-durable goods. It typically has a small impact as the Durable Goods Orders indicator report already signified the primary results on this sector of the economy.
2010-02-04	15:30	USD	Natural Gas Storage		-86B	-123B
		Natural Gas Storage This figure measures the change in the number of cubic feet of natural gas held in storage by this country from week to week. It has a moderate impact on the price of fuels, but provides mixed results for investors.
2010-02-04	18:45	CAD	BOC Gov Carney Speaks		*	*
		BOC Gov Carney Speaks Bank of Canada (BoC) Governor Carney is due to speak. These speeches often carry clues about future monetary policy decisions and can affect the market during their delivery.
2010-02-04	22:30	CHF	AIG Construction Index		49.3	-
		AIG Construction Index This indicator measures business conditions in a number of construction and construction-related companies. A number above 50.0 indicates industry expansion; below 50.0 signals a contraction. Survey conducted by Australian Industry Group (AIG).