U.S. Market Review: What to Expect

by: TradingHelpDesk

Previous session overview
The dollar gained to session highs against the higher-yielding euro and U.K. pound Friday in the wake of stronger-than-expected U.S. payrolls data. The U.S. unit also gained against the commodity-linked Canadian dollar, which suffered from a disappointing Canadian job report. This is an early sign that financial-crisis trading practices are normalizing.

Encouraging data has emboldened risk appetite and is pushing Treasury yields higher - the 10-year note's yield gained to its highest since early June - thereby supporting the dollar on the outlook for U.S. interest rates.
This is a drastic change from dominating trading trends for over the last year.

As a safe-haven asset, the dollar had declined throughout this financial crisis against riskier, higher-yielding currencies, such as the euro, when spurts of positive data boosted market sentiment - even if it is was positive U.S. data.

After the U.S. jobs report, a knee-jerk push higher in the euro against the dollar reversed within minutes, and the common currency fell to an intraday low of USD1.4273 from an intraday high of USD1.4415. The same happened for the U.K. pound. Instead, traders are using the safe-haven yen to fund bets in higher-yielding currencies.

Market expectation
EURUSD losses extend to USD1.4230 area now, putting the Monday low at USD1.4203 within sight and the 21d ma at USD1.4177 also easily visible as the strong dollar story for now overwhelms any risk-appetite. Talk of a European name as a steady euro seller but traders otherwise reporting relatively lackluster volumes, "occasional 50's," some says, but nothing much bigger.

USDJPY - supply to JPY97.20 easily overcome as the dollar surges to JPY97.45 area as the greenback rises across all fronts wile euro-yen stalls just shy of earlier highs near JPY138.60 area. Dollar sights set on JPY97.90 high of June 16 perhaps.

EURGBP continues to slowly grind its way lower, as rate extends pullback from the European morning highs at stg0.8592.