Wednesday, August 1, 2012

Forex Market Update: UK & US Data

Coming Up Today
  • UK Manufacturing PMI
  • US ISM Manufacturing PMI
  • US ADP Employment Change
  • FOMC Statement

We have a lot coming up today for Forex traders. Starting the day will be the UK’s Manufacturing PMI results. Remember, one of the week components to last week’s weak UK GDP results was manufacturing output. Therefore, expectations are probably not very high for today’s number.

Later in the day, US data will be dominating the headlines. First will be the ADP Employment data which is a precursor to Friday’s Non Farm Payrolls number. Followed by the afternoon’s FOMC Statement. Going into today’s Fed Meeting, Bernanke and Co. have been talking down another round of quantitative easing, even as they admit employment growth has been sluggish. As such, unless suddenly switch gears on their monetary policy approach, we can expect the Fed to remain in its “wait and see” pattern.

Charts to Watch

EURUSD: Finds support at 1.2250 after initially falling below 1.2300 earlier in this week. The pair is making a move towards last week’s highs which could propel an upside breakout if it can trade above this level. Also, Forex traders should be watching to see if the 1.2250 support steps up to the 1.2300 level and reveals that demand is becoming more aggressive.

GBPUSD: Remains in its 1.5450 to 1.5750 trading range. However, after finding support at 1.5450 last week, even after the UK’s poor GDP results, it showed that long term demand for the pair remains strong. As such, a better than expected Manufacturing PMI number today or overall risk buying could propel an upside breakout in the GBPUSD.

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