Friday, August 3, 2012

Market Update: Non Farm Payrolls Loom

Coming Up Today

  • UK Services PMI
  • US Non Farm Payrolls
  • US ISM Non -Manufacturing PMI

After Wednesday’s lack of a changes at the Fed’s FOMC Meeting, Forex traders are gearing up towards today’s Non Farm Payrolls report. The numbers come after ECB Chairman Mario Draghi shook up the Forex trading world yesterday by backtracking on his statement that the ECB “would do whatever it takes to preserve the Euro.” Draghi stated yesterday that the ECB would be proactive with its bond purchases. However he added that the German Bundesbank isn’t a big supporter of the initiative. The EURUSD plunged on the news falling to a low of 1.2130 compared to earlier highs of 1.2375. The drop caused massive confusion among trades who were initially buying the Euro on initial wire reports of the ECB extending its bond purchases. The initial spike was short lived as moments later Draghi clarified the ECB’s role.

Looking ahead, Forex traders continue to be watching Italian and Spanish yields which moved higher following the ECB’s meeting. Changes in yields are a barometer for trader’s sentiment towards the entire EU and have affected prices of the Euro. Also, the dollar will be in focus as a better than expected Non Farm Payrolls figure could extinguish any expectations that the Fed will act at its next meeting.
Charts to Watch  USDJPY: In February, the combination of strong US employment figures and monetary stimulus actions from the Bank of Japan triggered a multi week rally that saw the USDJPY gain from 76.00 to 84.00. With Fed Chairman Ben Bernanke and co. putting the central bank on hold, we could see a similar return of demand to the USDJPY if today’s Non Farm Payrolls figures show an upside surprise.
  Gold Fell hard yesterday following the overall risk selling. However, it continues to find demand above 1575 which is showing that it’s safe haven status still has some shine. If the Non Farm number leads to dollar strength and Gold remains above 1575, it would be a bullish indicator for Gold.

No comments:

Post a Comment