U.S. Job Creation In Doubt

The USD remained in a faithful range on Thursday setting the path for the always important Non Farm Employment Change numbers today. Trading across the board yesterday proved to be cautious. The U.S. did release weekly Unemployment Claims and this proved disappointing with an outcome of 479k, which exceeded the estimate of 456k. The result from the weekly jobless claims did not put any cheer into viewpoint that the U.S. economy is anemic. Wall Street has been relatively flat all week as it has turned in lackluster trading and volume. Today’s Non Farm Employment Change figure is expected to be minus -63k, which would be an improvement on last month’s outcome of minus -125k.

Job creation remains a difficult task for the U.S. economy and if not for the huge (excessive?) amount of government stimulus the official Unemployment Rate could look far worse. Many questions continue to be asked about deficits, out of control spending, and government measures which may only be prolonging a tepid recovery, but not curing ‘the patient’. Today Non Farm numbers are sure to create a swirl of activity. With traders being the main ingredient in this summer’s market it will be of interest to see what type of activity starts in the currency markets about one hour before the report is published in the States and carries forth until the end of session.

The EUR and GBP both traded in rather quiet form on Thursday, even as their representative Central Banks issued their monthly monetary policy. Neither the BoE or ECB created much of a splash, essentially leaving the two currencies to trade in a rather dollar centric sphere as investors worldwide wait for the critical data from the U.S. today. The U.K. will release its Manufacturing PMI reading today and the forecast carries an anticipated mark of 0.5%. The biggest proposition however for traders is likely to be risk appetite. With so many investors continuing to sit on the sidelines, traders will be left to gauge their sentiment and test ranges in what could become a volatile mix if surprises develop.

The JPY and AUD, along with Gold, all moved in rather cautious ranges too on Thursday. The thought that ‘fair value’ has been found could be argued. The price of a currency or commodity per the wisdom of many investors is what the market says it is. However, traders who are seeking to gain from the movements of these ‘vehicles’ cannot be faulted for trying to stare into the looking glass. Commodity prices have received plenty of attention due to the Wheat crisis that has developed in Russia and the questions that are surrounding its exports. Traders should note however that other major international growers still abound who have large quantities of product to export. Thus speculation has certainly played a part in the price of Wheat – and when and if fear subsides, the markets may react with a sell off within the commodity and its related physical resources.

The international economies still have major obstacles to overcome in order to achieve real growth, stagnation for the time being looks to be the domain of the U.S., Europe, and Japan. The question that should concern export nations is where demand on a grand scale will come from. Stability may be enough to keep the balancing act for China and others to do well, but if another slip up occurs within the U.S. and triggers another decline in Europe – the global implications are poor. While summer still abounds traders do have a seemingly firm grip on the broad markets, including currencies, but this fall could provide fireworks when investors are likely to join the fray once again.

Written by bforex.com