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Weekly Forex Outlook

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US Jobs Data Rock Markets

Mon, Jul 6 2009, 14:03 GMT
by Easy Forex Team

Easy Forex

Last week’s currency trading review

The Dollar gained on the back on the US June Non Farm Payrolls which came in at -467K vs. -375K and changed the mood of the market sending the Dow Jones down over 200 points Thursday. The Unemployment rate increased to 9.5% vs. 9.4% previously. The trading week was shortened by July 4th Holidays on Friday. Also of note was the drop in CB consumer confidence down to 49.7 from 55 previously seen and combined with the Jobs data to send Oil down over 10% from the highs seen on Monday. The Euro was pressured from USD strength but held up well compared to other currencies as another theme also played out during the week concerning the USD as a reserve currency. News that China wanted the G8 to discuss the USD sent the Euro surging towards 1.4200 and news over the weekend that India was concerned about the high level of USD in its reserves adds to this growing sentiment. The EUR/USD fell 0.53% closing at 1.3984, after opening the week at 1.4058.

The Japanese Yen gained on the back of rising risk sentiment with only the USD/JPY holding up well and GBP/JPY and AUD/JPY bearing the brunt of the selling. Q2 Tankan survey improved to -48 vs. -58 for the first improvement since 2007. The USD/JPY closed up 0.82% at 95.99 after opening the week at 95.20. The GBP was pressured by increased risk aversion and speculation that the UK economy is heading for a slow return to growth and that the BOE may increase Quantitative Easing at this weeks meeting.GBP/USD fell -1.18% closing at 1.6331 after opening at 1.6523. The AUD was pressured lower by bad economic data and slumping commodities and Global equities. May Trade Balance fell sharply to -560M vs. -125M forecast as exports plunged. Retail Sales held up well though up 1.0% in May. The AUD/USD closed down -1.34% at 0.79.67 after opening at 0.8074.

The forex trading week preview

In the States; On Monday JuneISM Non-Manufacturing is forecast at 46 vs. 44 previously. On Friday, May Trade Balance is forecast at -30 Bn vs. -29.2Bn previously. Also Released, University of Michigan (July Preliminary) forecast at 70.6 vs. 70.8 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German Factory Orders forecast at -31.2% y/y vs. -37.1% previously. On Wednesday Q1 GDP is expected to be confirmed at -4.8%. Finally on Thursday June German CPI is seen at 0.1% y/y. In the UK; On Tuesday, Industrial Production is forecast at -11.3% vs. -12.3% previously y/y. On Thursday, BOE meet to discuss rates and are widely expected to remain at 0.5% but traders will watch for further expansion of the QE program. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Tuesday, Machine Orders (May) forecast at -34.4% vs. -32.8% previously. On Thursday, June Machine Tool Orders previously at -79.20%. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; RBA meeting on Tuesday widely expected to remain at 3.0%. On Thursday, Unemployment Change is forecast at -20K in June while the Unemployment rate is expected to jump to 5.9% vs. 5.7% previously. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

• Euro – 1.3960

  Initial support at 1.3827 (Jun 29 low) followed by 1.3827 (Jun 22 low). Initial resistance is now located at 1.4201 (July 1 high) followed by 1.4267 (Jun 5 high)

• Yen – 95.90

  Initial support is located at 94.45 (Jun 1 low) followed by 93.86 (May 22 low). Initial resistance is now at 97.19 (Jun 19 high) followed by 97.89 (Jun 16 high).

• Pound – 1.6300

  Initial support at 1.6189 (Jun 18) followed by 1.6041 (Resistance Nov 6). Initial resistance is now at 1.6745 (Jul 1 Level) followed by 1.6830 (Fibo Level).

• Australian Dollar – 0.7945

  Initial support at 0.7790 (Jun 23 low) followed by the 0.7630 (May 19 low). Initial resistance is now at 0.8155 (Jun 30 high) followed by 0.8263 (Jun 3 high).

• Gold – 930

  Initial support at 923 (June 30 low) followed by 912 (Fibo level). Initial resistance is now at 948 (Jun 26 high) followed by 965 (June 10 high).

Published on  Mon, Jul 6 2009, 14:13 GMT