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Daily Trading Forecast

Today's Trading Focused on U.S. Non−Farm Payroll Report

Fri, May 2 2008, 10:56 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG

Trading in the currency markets today is extremely quiet as everyone awaits the U.S. employment numbers due out at 14:30 CET. Forecasts are calling for a drop in the Non-Farm Payroll numbers of between -50,000 to -90,000 jobs, with an average forecast of -75,000.

Currently, the general market sentiment is for a stronger dollar in reaction to the dollar's recent losses over the last few weeks. This sentiment has the potential to set up a "buy on rumor, sell on fact" scenario when the U.S. employment report is announced today. A number at -75,000 or less has the potential to start a dollar rally regardless of the deteriorating U.S. job situation. Below are more detailed reports by currency pair.

Intraday Market Outlook for Day Traders

EUR / USD
EUR / USD trading today will be subdued until the U.S. Non-Farm Payroll figures are announced at 14.30 CET. Currently, the market is trading at 1.5496. The expectation for the Non-Farm Payroll numbers is currently –75,000 and we feel any number near or below this will spark a dollar rally that could bring the EUR / USD down to 1.5335, which is an important support level. We see resistance in today’s trading at 1.5525 and feel this level could be reached in trading today prior to the U.S. employment report. We recommend short positions at prices above 1.5520 for a target of 1.5410 or even 1.5335 support and a stop at 1.5600. See chart below.

GBP / USD
With the market currently at 1.9870, prices are trading near important resistance at 1.9905. As with the EUR / USD, we believe trading will also remain subdued until the Non-Farm Payroll figures are announced, but believe this resistance level will hold until then. There is more and more market talk from traders suggesting selling the pound against the dollar and we feel this may be a good recommendation if the employment figures from the U.S. come in as expected at –75,000 jobs or if they show fewer jobs were lost. We recommend shorting the GBP / USD at prices over 1.9890 for a target of 1.9750 with a stop at 1.9950, but be aware that this movement, if it unfolds, will only come after the jobs report. See chart below.

USD / CHF
With a clear breakthrough at 1.0444 and trading currently at 1.0490, the USD / CHF moved into a higher consolidation, with a range of 1.0450 – 1.0500. The chance of a further breakout due to the jobs report might push the dollar up but volatility is lower than with the EUR / USD or GBP / USD trading. We have no recommendation today.

USD / JPY
Like the USD / CHF, the USD / JPY is trading to the upside in today’s market. Currently, prices are at 104.65 in very quiet trading. We have no recommendation today.

EUR / JPY
In today’s morning trading, the EUR / JPY tested its resistance level at 162.30, which held and is now currently trading at 162.05. We feel traders will trade with the longterm downtrend and push the EUR / JPY down to test the support level at 160.60. We recommend a short position at over 162.00 for a target of 160.60 and a stop at 162.55 See chart below.

EUR / USD Chart





GBP / USD Chart





EUR / JPY Chart

Published on  Fri, May 2 2008, 11:05 GMT