Forex Next Week: All points to US Unemployment on Friday, but ECB and BOE will provide some good interest
The dollar lost a little ground today as the market was reminded of the fragile US consumer. Nevertheless for the week the dollar gained against all major currencies with the exception of the GBP where it went sideways.
Next week, the US Employment Report will be anticipated on Friday. Last month, the Non-Farm Payroll came in better than expected at -20,000 jobs. This month the expectation is for a weaker report with a loss of -57,000 jobs. This would be the fifth decline in non farm jobs in a row. The Continuing Claims data, which has continued to move higher this month, and the steady Initial Claims suggest this will indeed be the case this month.
Before the report however, the US will have the Manufacturing PMI data released on Monday. The expectation is for the index to be unchanged at a below 50 level of 48.6. The Non Manufacturing PMI will be announced on Wednesday. It is forecast to come in at 51, a point weaker than last months 52 level.
In the Eurozone, they too will announce their Manufactuing PMI on Monday. It is expected to remain unchanged at 50.5. One has to wonder if the weakness in the data last week will start showing up in the Manufacturing PMI where it has been able to stay above the key 50 level on the back of export growth. On Tuesday, the PPI will be released, showing yet another oversized gain of 0.8%. Inflation whether it be CPI or PPI cannot be stopped with higher energy and a stronger EURO not helping matters. On Wedneday the Retail Sales bring the focus back to the weak growth theme.
The big event for the ECB will be the rate announcement on Thursday. Although no change is expected, the comments from ECB President Jean Claude Trichet will be very interesting given the higher flash CPI estimate released on Friday at 3.6%. Don’t be surprised to hear much more hawkish comments from the ECB given the inflaton threat. Growth is slowing but inflation remains their main focus. Trichet may give some good hints to the markets on Monday, Tuesday and Wednesday as he is expected to speak on each of the days (he sure does give a lot of speeches).
In the UK they too release PMI indices on Monday (Manufacturing 51.6 vesus 51 last month) and on Wedesday (Service 50.4 unchanged from last month). The BOE will also have an interest rate announcement on Thursday. They too are expected to announce no change in rates although inflationary pressures are also building there, creating a dilemma for the central bank as they struggle with a housing/consumer slowdown while inflation rises above the upper inflation band of 3.0% (a certainty).
Australia has a bunch of releases next week -PMI for Manufacturing and Services, Inflation, Retail Sales (all on Sunday night) , Building Approvals (Monday), GDP (Tuesday), Trade Balance (Wednesday) and the Royal Bank of Australia rate announcement on early Tuesday where no change is expected as they debate whether growth will slow enough to reduce their inflation woes. Australia still has strong export growth of mining products to China which is keeping employment strong.
The Reserve Bank of New Zealand has a rate announcement on Wednesday where anything can happen. No change is expected although comments will certainly make a big impact. There has been a lot of debate regarding RBNZ monetary poilcy of late. The government recently announced a tax cut which may put off easing. However, others feel policy at 8.25% is overly restrictive. NZ Employment was weaker than expected (jobs lost) suggesting the high rates, drought, and inflation are beginning to really hurt the consumer and businesses.
Have a great weekend to all
Greg Michalowski
Forex Trading USDCHF approaches key support
After 3 days of trading higher, the USDCHF has sold off today as the dollar softened. The pair is approaching support at the 1.0403-1.0408 level. This area corresponds to the 38.2% retracement level (1.0408) and the 100 hour MA (1.0403).
Forex Trading GBPUSD breaks through trendline resistance
The GBPUSD broke throught the trendline resistance and is squeezing higher as Friday afternoon trade slows.
Forex Trading GBPUSD moving sharply higher as dollar gets hit
The GBPUSD is testing the trendline resistance after breaking above the 100 hour moving average. Dollar gettting hit at oil moves higher and weaker data worries the market.
Forex Trading NZDUSD approaching resistance
The NZUSD is approaching resistance at the 0.7831 level. The 200 hour moving average is located at this level. The level is also a low from the the 28th.
Forex News- U of Michigan Consumer Confidence
Preliminary Number: Expected at 59.5- Came in at 59.8
Although this number is slightly better, it is still an all time low. With high inflation, and weaker employment, and housing crisis still ongoing, consumer confidence will remain depressed.
Forex Trading USDCAD fails to hold the 0.9956 level and corrects
The USDCAD could not hold above the 0.9956 level and corrected sharply lower (see earlier post on USDCAD). The pair moved below the 50 retracement level of the days range which puts the market back to neutral. The failure is a bit disappointing.
Forex News Chicago PMI 49.1. Higher than expected
Price 87.5 versus 82.9 last. Employment rebounded to 41.2 from 35.3. New orders were also up at 56.1 from 53.0
This is higher than expectation but still below the 50 level. Suggest sluggish manufacturing with higher prices.
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