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Forex − Risky Assets take a hit on U.S. Payrolls

Fri, Jul 3 2009, 10:35 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Forex News and Events:

The dollar rose against major currencies yesterday after bleak U.S. jobs data renewed concerns about the economy and enhanced the greenback's safe-haven appeal. The Euro was down 1.1 percent at $1.4002, retreating from $1.4201 hit on Wednesday, its highest level since early June. Adding to pressure on the Euro were comments from the European Central Bank President Jean-Claude Trichet that Euro-zone activity would likely remain weak for the rest of the year. The dollar slipped 0.8 percent against Yen to 95.85, after trading as high as 96.89 yen before the jobs report. The Swiss franc hit the day's low of 1.5257 per euro from around 1.52 after a Swiss National Bank official said the central bank was prepared to continue interventions to stem the domestic currency's strength. Volume was light ahead of the three-day weekend for the Independence Day holiday in the United States. Overnight the dollar held gains made in the wake of bleaker than expected U.S. jobs numbers, hovering near its highest levels in a week against the Euro on Friday and pressuring commodity currencies such as the Australian dollar. U.S. Treasury bonds rose while stocks fell more than 2 percent after a government report showed U.S. employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5 percent. The Euro also extended losses against the yen, dropping 0.4 percent to 133.82 yen, after falling nearly 2 percent on Thursday The dollar edged down against the yen to 95.82 yen although it remained well within a range of 93.50-100 which has limited it since mid-April. The Australian dollar was also trading around its lowest levels in a week, at $0.7925, now a long way off an eight-month high of $0.8265 set in early June. It fell more than 2 percent against the yen on Thursday and dipped to 75.78 Yen on Friday, also its lowest level in a week. We’re also testing important support levels on stocks with S&P trend line support coming in at 888 (which is also the 200 DMA). A break would lead lower for 859. Same configuration for the DAX, where trend line support comes in at 4669, below 4579 is the next level. Financial markets will be closed on Friday and will reopen on Monday.

Today's Key Issues (time in GMT):

09:30 GBP PMI Services JUN 51.5 vs. 51.7
09:30 GBP Official Reserves (Changes) JUN Prev. $2121M
09:30 GBP BoE Housing Equity Withdrawal 1Q -£9.0B vs. -£8.0B
10:00 EUR Euro-Zone Retail Sales (MoM) MAY -0.10% vs. 0.20%

The Risk Today:

EurUsd EUR/USD remains in its 1.3940 to 1.4200 range but the dip below 1.3980 suggests profit taking has started. On a US holiday with intraday momentum now reading oversold, hopes for follow through today aren’t high but into next week and throughout the rest of the month the risk is that the parameters of the wider 1.37 to 1.42 range are tested.

GbpUsd GBPUSD is still range trading within 1.6270 to 1.6600 but bigger picture the evidence for an unfolding top is becoming compelling and we are increasingly looking for reason to sell as from next week.

UsdJpy A break of trendline support at 95.25 is needed to hint at a more important downside potential and a test of the key 93.85/30 support zone.

UsdChf USD/CHF is locked between trendlines at 1.0630 and 1.1020 but for which investors show low enthusiasm so far.

Resistance and Support:

Published on  Fri, Jul 3 2009, 11:12 GMT