Forex Tips & Daily Analysis

Friday, 1st Feb 2013ForexHint
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Economical News | Technical Analysis | Wild Card | Market Trend | Indicators

All Eyes on US Employment Data Today.

The euro saw a temporary downward correction during morning trading yesterday, following a worse than expected German retail sales figure that caused investors to shift their funds to safe-haven assets. That being said, the bearish movement was only temporary, and by the common currency had recouped virtually all of its losses by the afternoon session. As markets get ready to close for the weekend, all eyes are likely to be on today's US Non-Farm Payrolls (NFP) figure, scheduled to be released at 13:30 GMT. As the most significant indicator on the forex calendar, traders can be sure that the NFP will generate significant market volatility.

Economical News

USD

The US dollar saw temporary gains against its higher-yielding currency rivals yesterday, following the release of worse than expected euro-zone economic data. The GBP/USD fell more than 60 pips during early morning trading, eventually reaching as low as 1.5774, before bouncing back to the 1.5820 level during afternoon trading. Against the Japanese yen, the greenback advanced close to 30 pips during afternoon trading before peaking at 91.22, slightly below a recent 2 ½ year high.

Today, all eyes are likely to be on the US Non-Farm Employment Change figure, arguably the most important economic indicator on the forex calendar. Analysts expect today's news to come in at 161K, slightly higher than last month's 155K. A higher than expected result today is likely result in increased confidence in the US economic recovery, which may lead to gains for the dollar before markets close for the weekend. Conversely, if today's news comes in below the forecasted level, the greenback could reverse its bullish trend against the JPY.

EUR

The euro took losses during early morning trading yesterday, following a worse than expected German retail sales figure which led to doubts about the strength of the euro-zone economic recovery. The EUR/USD fell more than 40 pips during the first part of the day, eventually reaching as low as 1.3540, before an upward correction brought the pair back to the 1.3570 level, just below a 14-month high. Against the British pound, the common-currency spent the day fluctuating between 0.8557 and 0.887.

In addition to US employment data today, euro traders will also want to pay attention to several potentially significant EU economic indicators. Spanish and Italian manufacturing data, followed by the euro-zone unemployment rate, could all boost the euro during morning trading if they signal additional economic growth in the EU. Furthermore, the EUR/USD could see additional gains during afternoon trading if today's NFP figure comes in below expectations.

Gold

Signs of global economic growth yesterday, including a better than expected German Unemployment Change figure, caused investors to shift their funds away from safe-haven assets during European trading yesterday. As a result, gold prices tumbled more than $18 an ounce, eventually reaching as low as $1661.19, before bouncing back to the $1664 level.

Today, gold traders will want to pay careful attention to the US Non-Farm Payrolls figure, set to be released at 13:30 GMT. A better than expected figure is likely to generate further optimism in the global economic recovery, which may lead to additional losses for gold during afternoon trading.

Technical Analysis

EUR/USD

A bearish cross is close to forming on the weekly chart's Slow Stochastic, indicating that a downward correction could occur in the near future. This theory is supported by the Relative Strength Index on the same chart, which is currently approaching overbought territory. Opening short positions may be the best option for this pair.

GBP/USD

The Williams Percent Range on the weekly chart has fallen in into oversold territory, signaling that an upward correction could occur in the near future. This theory is supported by the Slow Stochastic on the daily chart, which is close to forming a bullish cross. Opening long positions may be the best choice for traders.

USD/JPY

The Relative Strength Index on the weekly chart is currently overbought territory, indicating that a downward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. Opening short positions may be the best choice for traders.

USD/CHF

Most long-term technical indicators show this pair trading in neutral territory, meaning a definitive trend is difficult to predict at this time. Traders may want to take a wait and see approach for this pair, as a clearer picture is likely to present itself in the near future.

Wild Card

EUR/NOK

The Bollinger Bands on the daily chart are narrowing, signaling that a price shift could occur in the near future. Furthermore, a bearish cross has formed on the same chart's MACD/OsMA, indicating that the shift could be downward. This may be a good time for

Indicators

DateTime GMT$€£¥EventPeriodPrev.ForecastImp
2013-02-01USD
Total Vehicle Saleshelp
15.4M15.2M1
Total Vehicle Sales

The total number of imported and domestically produced automobiles sold over the previous month. The figure is presented on an annualized basis.

2013-02-0100:30AUD
PPIhelp
0.6%0.3%5
PPI

The Producer Price Index (PPI) is a measure of the inflation rate incurred by manufacturers when purchasing goods and services.

2013-02-0105:30AUD
Commodity Priceshelp
-8.7%-6.4%1
Commodity Prices

Commodities account for a very large portion of Australia's GDP. As such, commodity prices are a leading indicator of economic health.

2013-02-0108:15EUR
Spanish Manufacturing PMIhelp
44.645.53
Spanish Manufacturing PMI

Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry;

2013-02-0108:30CHF
SVME PMIhelp
49.550.53
SVME PMI

The Schweizerischer Verband für Materialwirtschaft und Einkauf (SVME) Purchasing Manager's Index (PMI) shows the actions of purchasing managers, with a reading above 50 showing growth. Forex traders follow this type of survey closely because purchasing managers' opinions can be viewed as a leading indicator of overall economic performance.

2013-02-0108:45EUR
Italian Manufacturing PMIhelp
46.747.63
Italian Manufacturing PMI

Survey of about 450 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories;

2013-02-0109:00EUR
Final Manufacturing PMIhelp
47.547.51
Final Manufacturing PMI

This indicator is the results from a survey of purchasing managers in the manufacturing industry used in order to gauge economic health from their perspective.

2013-02-0109:00EUR
Italian Monthly Unemployment Ratehelp
11.1%11.3%1
Italian Monthly Unemployment Rate

Measure the percentage of total work force that is unemployed and actively seeking employment during the previous month;

2013-02-0109:30GBP
Manufacturing PMIhelp
51.451.05
Manufacturing PMI

The Manufacturing sector's Purchasing Manager's Index (PMI) is an indicator which measures how much activity the purchasing managers of the manufacturing sector in the economy are experiencing.

2013-02-0110:00EUR
Unemployment Ratehelp
11.8%11.9%3
Unemployment Rate

This figure represents the percentage of potential workers that are currently unemployed and actively seeking a job. This report is typically overlooked as its information is derived from previously released indicators.

2013-02-0110:00EUR
CPI Flash Estimatehelp
2.2%2.2%3
CPI Flash Estimate

The Consumer Price Index's (CPI) Flash Estimate measures the inflation rate incurred by consumers when purchasing goods and services. It typically carries a significant impact as traders depend on this information for a glimpse into inflationary pressures and its impact on the nation's currency.

2013-02-0113:30USD
Non-Farm Employment Changehelp
155K161K5
Non-Farm Employment Change

This report measures the change in the number of employed vs. unemployed persons in all sectors of the economy except the farming industry. It is a leading indicator of economic health.

2013-02-0113:30USD
Unemployment Ratehelp
7.8%7.8%5
Unemployment Rate

This figure represents the percentage of potential workers that are currently unemployed and actively seeking a job. This report is typically overlooked as its information is derived from previously released indicators.

2013-02-0113:30USD
Average Hourly Earningshelp
0.3%0.2%3
Average Hourly Earnings

This indicator evaluates the level of inflation incurred by all sectors of the economy (excluding the farming industry) when paying wages to employees. It is a leading indicator of consumer spending because an increase to an employee's real salary signifies an increase to private consumption.

2013-02-0113:30USD
FOMC Member Dudley Speakshelp
**1
FOMC Member Dudley Speaks

Federal Open Market Committee (FOMC) member William Dudley is due to speak today. Traders usually watch these speeches closely as they are then able to speculate about future monetary policy decisions.

2013-02-0114:00USD
Final Manufacturing PMIhelp
56.156.11
Final Manufacturing PMI

This indicator is the results from a survey of purchasing managers in the manufacturing industry used in order to gauge economic health from their perspective.

2013-02-0114:55USD
Revised UoM Consumer Sentimenthelp
71.371.43
Revised UoM Consumer Sentiment

The University of Michigan (UoM) releases this report which is a survey of consumer sentiment towards general business conditions and economic health.

2013-02-0114:55USD
Revised UoM Inflation Expectationshelp
3.3%-1
Revised UoM Inflation Expectations

Measures the inflation of goods and services consumers are expecting over the next 12 months.

2013-02-0115:00USD
ISM Manufacturing PMIhelp
50.750.85
ISM Manufacturing PMI

This is an index based on surveyed purchasing managers in the manufacturing industry. A number above 50 indicates an expansion in the manufacturing sector; below 50 signals a contraction. This index is a strong indicator of an economy's general health.

2013-02-0115:00USD
Construction Spendinghelp
-0.3%0.6%1
Construction Spending

This report provides a measure of the month-by-month change in the value of new construction projects.

2013-02-0115:00USD
ISM Manufacturing Priceshelp
55.556.31
ISM Manufacturing Prices

The Institute of Supply Management's (ISM) Manufacturing Prices report measures the month-by-month inflation incurred by manufacturers when purchasing materials.

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