Forex Major Currencies Outlook (March 11, 2013)

USD: Bullish

The U.S. dollar enjoyed a nice strong rally after the NFP figure came in higher than expected. The U.S. economy was able to add 236K jobs in February, higher than the estimated 162K increase. Although the previous month’s reading was revised down from 157K to 119K, the jobless rate was still able to drop from 7.9% to 7.7% in February. Since the Fed is closely monitoring improvements in the jobs market as part of their consideration in tapering off asset purchases, demand for the U.S. dollar jumped right after the upbeat figures were posted. There aren’t a lot of reports due from the U.S. at the first half of this week, which suggests potential consolidation for the next few days with a slight bullish bias towards the U.S. dollar because of its safe-haven status and relatively stronger economic standing.

EUR: Neutral

There are no major reports due from the euro zone this week as EUR/USD continues to test the 1.3000 major psychological support level. Only the German trade balance and French industrial production reports are on tap for today and these aren’t likely to trigger a strong break or bounce from the 1.0300 area. Keep an eye out for any political updates from Italy as these could result in surprise moves for the euro anytime within the week.

GBP: Bearish

The combination of weak U.K. economic outlook and strong U.S. economic data triggered a convincing break below 1.5000 for GBP/USD. The pair gapped down over the weekend and could continue to move lower for the rest of the week. However, a retest of the 1.5000 handle could be in the cards if profit-taking takes place as the U.K. isn’t set to print any major reports for today.

AUD: Bullish

Despite the Aussie selloff that took place after the U.S. NFP release, AUD/USD remains well above the 1.0200 major psychological support level. After all, Australia has also been enjoying strong economic reports recently while the RBA asserted that their recent easing efforts are appropriate and are just starting to take effect. No reports are due from Australia during the first few days of this week as AUD/USD could keep testing the 1.0200 area, but employment data due on Thursday could trigger either a bounce or a break depending on the actual results.

NZD: Bearish

NZD/USD seems to be forming a new range between the .8200 and .8300 major psychological levels as traders await the RBNZ rate decision later on this week. RBNZ head Graeme Wheeler seemed to hint at a rate cut during his one of his recent speeches, which suggests that traders could start pricing in negative expectations for the actual event as early as today.

CAD: Bullish

The Canadian dollar was the only major currency able to avoid a bloodbath from the upbeat U.S. NFP data as the Canadian economy also posted strong jobs growth during the period. Canada showed a 50.7K increase in hiring, higher than the estimated 7.8K growth and huge improvement from the previous month’s 21.9K drop in hiring. This was enough to keep their jobless rate steady at 7.0% instead of rising to 7.1%. No economic data is set for release from Canada this week but the recent labor figures could keep the Loonie afloat.

JPY: Neutral

USD/JPY broke above the 94.00 major psychological resistance and reached the 96.50 area during the NFP release on Friday yet the Japanese yen still managed to gain against its other counterparts. This suggests that traders are still risk averse, to the benefit of the lower-yielding yen. Data from Japan has been mixed so far as core machinery orders came in weak while M2 money supply beat expectations. BOJ monetary policy meeting minutes and Japan’s tertiary industry activity index are due today and these could result in clearer yen price action.

By Kate Curtis from Trader’s Way