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Daily Forex Technical Report

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Daily Forex Technical Report − Focus on Non−Farm Payroll

Fri, Nov 7 2008, 07:52 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Focus on Non-Farm Payroll

Dollar and yen strengthens mildly overnight on weakness in US stock markets but no follow through buying is seen in the Asian session today. Markets are holding their bets ahead of the highly anticipated Non-Farm Payroll report. Economists expect the job market in the US to contract for the tenth consecutive months in Oct and the contraction is accelerating with -200k drop in payrolls. Unemployment rate is expected to climb to a five year high of 6.3%.

There are many reasons to expect an even worse NFP number today. ADP report has already disappointed the markets by showing -157k drop in private payroll. Employment component of both ISM indices were deep in contraction region. Challenger layoffs rose to a 5 year high of 79%. Initial claims were elevated above 470k while continuing claims reached five year high. These are known facts and hence even if the NFP number is worse than expected, there may not be much impact to the markets if it's not too far off. Instead, the mover could indeed be the unemployment rate.

Technically speaking, the forex markets are still lacking a clear direction. Though, this week's development argues that we may have seen the bottom of the pullback in dollar and yen. Stock markets development is still the main driver in FX. Since we're expecting DOW to head lower to test the lower side of recent range of 7884/8440, more upside is still in favor in dollar and yen in near term.

Another piece of important data to watch will be Canadian job report which is expected to show -10k contraction in Oct. Unemployment rate is expected to climb from 6.1% to 6.2%. USD/CAD's break of 1.1892/1900 resistance suggests that correction from 1.3015 has completed already. A weaker than expected job number today will support this near term bullish view and encourage a rally in USD/CAD through 1.2375 near term resistance.

Data released today so far saw Swiss unemployment rate rose from 2.4% to 2.5% in Oct. Germany Trade surplus cam in at 13.7b. Germany industrial production, US pending home sales and wholesale inventories will be featured.

More Forex Technical Analysis Reports Here.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.6559; (P) 0.6730; (R1) 0.6824; More

As discussed before, AUD/USD's rebound from 0.6008 could have already completed at 0.7014 already. 4 hours MACD's turn negative adds some more credence to this case too. Break of 0.6549 minor support will confirm and bring retest of 0.6008 low. On the upside, though, above 0.7014 will indicate that rise from 0.6008 is still in progress for 38.2% retracement of 0.9849 to 0.6008 at 0.7475.

In the bigger picture, the strong rebound from 0.6008 indicates that whole fall from 0.9849 has likely completed the five wave sequence already, with the fifth wave ended at 0.6008, ahead of 76.4% retracement of 0.4773 to 0.9849 at 0.5971. Stronger rebound could be seen to 38.2% retracement of 0.9849 to 0.6008 at 0.7475 or above. Nevertheless, note that the impulsive nature of the fall from 0.9849 to 0.6008 indicate that price actions from 0.6008 is developing into correction/consolidation in a larger down trend only. The long term down trend is still expected to resume after completing the consolidation. On the downside, sustained break of 0.6008 will indicate that the down trend from 0.9849 has resumed for at least another five wave medium term decline.

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Published on  Fri, Nov 7 2008, 08:10 GMT