NonFarm Payrolls to show US Economic Health

Last week’s currency trading review

The USD/JPY the dramatic sell off in the Japanese Yen continued last week with Japanese Officials jawboning the major from Y88 to Y91. Japanese Officials were quoted as saying Y95-100 is appropriate and that they are fighting deflation and not currency manipulating. Officials added that market forces should set the USD/JPY rate the reiterated but that the Yen is correcting from a very overvalued level. G7 rules dictate that no country should engage in unilateral currency intervention.

The EUR/USD remained the strongest currency in the market last week with only member of the G3 that is not printing money via QE. The euro broke out of ranges to the topside on EUR/GBP and EUR/JPY. Euro strength while not yet an issue for EU officials will slowdown the recovery of exports. Officials must also be wary of talking down the Euro which has only just emerged intact from the Debt Crisis.

Currency Movement last week

EUR/USD was up +1.03% closing at 1.3451, after opening the week at 1.3313.

USD/JPY was up +0.90% closing at 90.88, after opening at 90.06.

GBP/USD was down -0.51% closing at 1.5793 after opening at 1.5873.

AUD/USD was down -0.79%closing at 1.0424 after opening at 1.0506.

This Week’s Trading Preview

USD/JPY intraday: intraday support around 90.55.

Pivot: 90.55

Our preference: Long positions above 90.55 with targets @ 91.55 & 92 in extension.

Alternative scenario: Below 90.55 look for further downside with 90.2 & 89.8 as targets.

Comment: a support base at 90.55 has formed and has allowed for a temporary stabilisation.

Key levels
92.2
92
91.55
90.88 last
90.55
90.2
89.8

Forex Economic Data Preview

In the States; On Monday, December Durable Goods Orders forecast at1.0% vs. 0.7% previously. Also December Pending Home Sales forecast at 0.8% vs.1.7% previously. On Tuesday, CaseShiller House Prices forecast at o gain 5.2% in November. Also CB Consumer Confidence forecast at 66.3 vs. 65.1 previously. On Wednesday, ADP Private Employment previously at 215k. Also FOMC Rates Decision forecast to hold at 0.25%. Focuson Statement to be released afterwards. Weekly Jobless Claims previously at330k. Also January Chicago PMI previously at 51.6. On Friday, January ISM Manufacturing previously at 50.7. Also January NonFarmPayrolls forecast at 156k vs. 155k previously. January Unemployment Rateforecast at 7.8% vs. 7.8% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German GFK Consumer Climate forecast at 5.8 vs. 5.6 previously. On Wednesday, German and Italian Auctions, SpanishQ4 Flash GDP forecast at -0.6% vs. -0.3% previously. On Thursday, President Weidmann Speaks. Also December German Unemployment Change forecast at 9k vs. 3kpreviously. Finally on Friday we have January CPI forecast at 2.2% y/y. Also December EU Unemployment Rate forecast at 11.9% vs. 11.8% previously. In the UK; On Monday, December Mortgage Approvals forecast at 55k vs. 54k previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Wednesday, December Retail Sales forecast at 0.4% vs.1.2% previously. In Australia; On Tuesday, NAB Business Confidence previously at -9. On Friday Q4 PPI forecast at0.3% vs. 0.6% previously q/q.