Fri, Oct 3 2008, 13:37 GMT
by ActionForex.com Team
Action Insight Mid-Day Report
Dollar Extends Rally Despite Poor NFP
Dollar's rally extends further in early US session despite much weaker than expected employment report. Non-farm payroll report showed -159k contraction in the job market in US in the month of Sep, far worse than expectation of -100k, and was the biggest fall since Mar 03. The total job loss in Q3 after revisions added up to -299k, much higher than Q2's 214k. Unemployment rate remains elevated at 6.1%. Average hourly earnings rose 0.2% mom but average weekly hours dropped -0.3% mom. ISM non-manufacturing index will be released later in the US session and markets' focus will also be on result of House vote on the $700b bailout plan.
Technically speaking, note that dollar's strength is particularly apparent against Euro and Canadian dollar. EUR/USD breaks through yesterday's low and dives further to as low as 1.3706 so far. USD/CAD is boosted further by sharp fall in oil prices to below 92 level. USD/CAD finally takes out 1.0819 resistance and confirms that medium term rise from 0.9056 has resumed.
Other data released today include UK Services PMI which fell to record low of 46 in Sep. Eurozone retail sales rose 0.3% mom, dropped -1.8% yoy in Aug. Eurozone Services PMI was revised higher to 48.4 in Sep. Swiss CPI rose 0.1% mom 2.9% yoy in Sep, above expectation of -0.1% mom, 2.7% yoy.
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USD/CAD Mid-Day Outlook
Daily Pivots: (S1) 1.0661; (P) 1.0734; (R1) 1.0858; More.
USD/CAD surges to as high as 1.0841 in early US session and at this point, intraday bias remains on the upside as long as 1.0750 minor support holds. As discussed before, sustained trading above resistance zone of 1.0791/98 and 1.0819 high will confirm that medium term rise from 0.9056 has resumed. Next short term target is now 61.8% projection of 0.9823 to 1.0819 from 1.0297 at 1.0913. On the downside, below 1.0750 will turn intraday outlook neutral first and bring retreat. But downside should be contained above 1.0546 support and bring rally resumption.
In the bigger picture, sustained trading above 1.0791/98 (61.8% retracement of 1.1874 to 0.9056 at 1.0798, 61.8% projection of 0.9056 to 1.0378 from 0.9974 at 1.0791) will confirm that medium rise from 0.9056 has resumed. Also, this will be an important indication that the rise from 0.9056 is more than a correction to the long term down trend from 1.6196. Next medium term focus will be on 1.1874 resistance. On the downside, Below 1.0297 is needed to be the first signal that a top is formed. Otherwise, further rally is still in favor even in case of deep pullback.
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Published on Fri, Oct 3 2008, 13:42 GMT
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