Non-Farm Payrolls Week Begins

Last week ended with a recovery for the Euro, mainly due to speculations that the Euro-Zone will offer a bailout plan for Greece. This week’s trading will continue to be affected by the Greece debt crisis, yet the big move of the week is expected on Friday when the U.S. Non-Farm Payrolls will be released.

Economic News

USD – Dollar Continues To Strengthen Against the Majors

The Dollar’s rally vs. the majors continued on last week trading session. The Dollar reached a 10-month high against the Euro last week as the EUR/USD pair dropped to the 1.3266 level. The Dollar continued to strengthen against the Pound and Yen as well.

The Dollar rises as the U.S. economy provides more and more positive data. The Existing Home Sales report, which measures the number of residential buildings that were sold during February, rose by 5.02M. This has been the 8th month in a row that over 5 million buildings were sold. In addition, the Core Durable Goods Orders showed that the total value of new purchase orders placed with manufacturers for durable goods rose by 0.9%, beating expectations for a 0.6% rise. Yet the most significant data from last week was the weekly Unemployment Claims. The report showed that merely 442,000 individuals have filed for unemployment insurance for the first time during the past week. This has been the best result in 6 weeks, and one of the lowest amount of weekly jobless claims since the recession began.

As for the week ahead, the main news event of next week is the U.S. Non-Farm Payrolls on Friday. This report provides a very up to date data regarding the employment condition, and tends to have an immense impact on the market. Traders are also advised to follow the ADP forecast which is scheduled for Wednesday. Investors usually rely on the authenticity of this forecast, and thus this release often has a large impact on the market as well.

EUR – Euro Sees Mixed Results

The Euro began last week’s trading session with a falling trend against most of the major currencies. The Euro even reached a 10-month low against the Dollar on Thursday. However, during last Friday, the Euro managed to rebound and erased most of its losses.

Last week’s trading was once again mostly impacted by the Greece debt crisis. As the week began, it seemed that the European leaders will not agree on a rescue plan for Greece. This has reduced the already low risk appetite, and turned investors to look for safer assets. However, since Thursday concrete reports have claimed that an aid plan for Greece is about to be declared. This has boosted confidence in the region’s assets, and as a result supported the Euro as well. In addition, the German Business Climate survey has delivered a better than expected figures, mostly as a result of the weak Euro that boosted export prospects. The combination of the Greece bailout notification and the positive economic data has strengthened the Euro promptly.

Looking ahead to this week, a batch of data is expected from the Euro-Zone. Traders should first and for most follow any development regarding the Greece debt crisis. This issue is likely to continue affecting the Euro for the near future. In addition, traders should take under consideration that a final bailout plan is likely to boost the Euro.

JPY – Yen Looks to Bounce Back after Last Week’s fall

The Japanese Yen lost ground against its major rivals last week. The loss was uncharacteristic, as concern throughout global markets, which generally boosts the Yen did the exact opposite. Local economic news also failed to inspire a rise in the JPY as it gave up roughly 3% against the USD, EUR and GBP. Though not a significant loss, the lack of correlation to risk aversion could force traders to hesitate with JPY investments.

The JPY was static as it returned to trading early Monday morning. Positive retail sales numbers did not have much affect as the currency stayed close to closing prices at 92.60 to the dollar and 138.25 to the pound.

This week, should provide some movement throughout the major pairs, as the market gears up for Non-Farm Payrolls, and another week of heated debate over the US Healthcare reform and its effect on all markets. Local news from Japan should provide some movement for the JPY after the release of Wednesday’s Tankan Manufacturing Index. Forecasts look for growing improvement in the figure, as last months score of -24 was the highest in over two and a half years.

Oil – Oil Consolidates Around $80 a Barrel

Last week’s trading proved one thing, $80 a barrel is a stabile price for crude oil. Crude began last week with a rising trend that peaked at $82.15 a barrel. However as the week progressed, crude oil saw several ups and downs, which took oil back to around $80 a barrel.

It seems that the reduction in the fourth quarter U.S. Gross Domestic Product has added to concerns that growth in fuel demand could slow. There are currently worries regarding the strength of the U.S. economy, which turns investors to look for safer assets than crude oil. It currently seems that crude oil will fail to reach above $83 a barrel unless concrete data will prove that the U.S. recovery pace is steady.

As for the following week, traders are advised to follow the main publication from the U.S. economy, especially the Non-Farm Payrolls on Friday, as they tend to impact crude oil the most. Traders should also follow the U.S. Crude Oil Inventories as this report has proven to have an imminent impact over the market.

Technical News

The pair may be experiencing a downward trend today as the 2 hour and 4 hour RSI are heading into the overbought territory and with a bearish cross evident on the 8 hour chart’s Slow Stochastic. The daily RSI, however, is floating near the oversold territory. Going short with tight stops might be advised for today.
The indicator’s for the pair are floating in neutral territory as the pair seems to be range trading between 1.4900 and 1.4960. Waiting on a clearer direction for the pair may be advised for today.
The pair may be experiencing a downward correction today as the 4 hour, 8 hour and daily RSI are floating in the overbought territory while a bearish cross is evident on the hourly and daily charts’ Slow Stochastic. Furthermore, there is a breach of the upper Bollinger Band evident on the daily chart. Going short for today may be a good option.
The pair may experience a slight downward movement today as a bearish cross is evident on the hourly chart’s Slow Stochastic, indicating an imminent downward movement. Going short with tight stops may be advised for today.

The Wild Card

The hourly and 2 hour charts’ RSI is floating in the oversold territory, indicating an expected an expected upward movement. Furthermore, a bullish cross is evident on the 4 hour chart’s Slow Stochastic. Forex traders may be advised to go long for the day.

Written by