http://www.dailyfx.com/forex/fundamental/article/weekly_spotlight/2011/01/06/Forex_Traders_Place_the_Spotlight_on_the_Dollar_as_Nonfarm_Payrolls_Takes_Center_Stage.html
Talking Points
- ADP Employment More Than Doubles Expectations
- Monster.com Employment Index Falls To Lowest Level Since March
- ISM Manufacturing Remains at Elevated Levels
- Fed Says Labor Market Conditions Remain at Depressed Levels
- Unemployment Rate Expected to Scale Back From 9.8 Percent
Forex traders will place the spotlight this week on the highly anticipated U.S. nonfarm payrolls report, which will be released on Friday at 13:30 GMT. Economists are expecting payrolls to jump 150K, which will mark the highest reading since October. With uncertainty surrounding growth in the world’s largest economy, a better than expected report may be the catalyst needed for the greenback to continue its journey. Indeed, market bias going into the report is dollar positive; however, rather than anticipate currency moves, we will await confirmation of the release. It is worth noting that last month’s expectations were also for a 150K increase, but figures rose a mere 39K and market reaction was dollar weakness against all major currencies.
Ahead of the release, the ADP employment change more than doubled expectations in December and fueled optimism that nonfarm payrolls could top economists’ predictions. Figures rose a massive 297K amid forecasts of 100K. ADP developments ahead of the payrolls report are worth noting due to the fact that the index tends to undershoot the labor department’s measure. In turn, many traders are expecting the private component of the NFP report to exceed forecasts. Though the headline figure bodes well for the world’s largest economy, the ADP data may have been imprecise. As stated by Goldman Sachs and JP Morgan economists, seasonal factors may have been the driver behind the impressive numbers.
Meanwhile, the Monster.com employment index fell to 130 in December from 134 the month prior to mark the lowest level since March 2010. The report is of great importance because the index measures overall employee demand from online recruitment activity, reviewing more than 1500 websites. In turn, the index is indicating that hiring may remain depressed in the near term. The decline in help wanted ads also backs the Fed’s concerns surrounding high unemployment. Not to overlook, the ISM non-manufacturing report showed that the employment component continues to hover around September’s level.
All in all, traders should trade carefully ahead of the release as the dollar stands at the crossroads. Indeed, the release may add color to the bleak dollar picture and pave the way for a profitable trade heading into next week’s session. The dollar has been gaining momentum recently on the back of positive fundamentals in the U.S.; thus, a better than expected report will push the buck higher. Conversely, a dismal NFP figure may set the stage for a short dollar position as concerns surrounding inflation and the labor force remains. Nonetheless, gauging sentiment will be as important as the report itself.
Created by Michael Wright
Source: Bloomberg– Created by Michael Wright
The unemployment rate in the U.S. has fallen from a high of 9.9 percent in April to 9.5 percent in July and now stands at 9.8 percent, according to the U.S. labor department. Economists are now expecting the jobless rate to return to at least 9.7 percent in December.
AUDUSD Daily Chart
Source: Intellicharts – Prepared by Michael Wright
AUDUSD: The pair has extended its three day decline and now looks poised to test the lower bounds of the ascending channel that has remained intact since May 2010. Technical developments as of late point to losses in the pair and a break below this area may be in the horizon. The MACD has crossed over to the downside, while our user defined slow stochastic indicator continues to signal losses after since signaling a reversal in the pair earlier this week.
Written by Michael Wright, Currency Analyst
To Receive Future Articles by Email, please contact me at mwright@fxcm.com
Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Intraday Trading, Weekly Spotlight, and Forex Trading Weekly Forecast
DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.
Learn currency trading with a free practice account and charts from FXCM.
No comments:
Post a Comment