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Market Wire Update: Usd Pullback Following Friday’s NFP Data

|Includes: FXA, FXE, FXY, GLD, SPY, UDN, USO, PowerShares DB USD Bull ETF (UUP)

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Market Wire Update:


Usd Pullback Following Friday’s NFP Data

Forex Trader Note:
The forex market gapped lower against the Usd at the start of trade, following on from the dollar selling that accompanied the Non-farm Payroll release last week. Most traders will be looking for a pull-back to sell the Usd from at better rates than the market currently offers. S&P futures gapped up to 1145, gold gapped up to 1155, and German and Japanese equity futures markets also moved higher.

With a relatively clear economic calendar, we are looking at long Aud/Usd (growth and interest rate differentials), looking at the chance to buy Usd/Jpy on the pull-back (interest rate differentials), and long Eur/Usd and Eur/Jpy (risk tolerance in equity and Treasury markets).

The major pairs held within their previous session highs or lows in trade on Friday. The latest daily chart closes offered the chance to see if this is a swing point on the dollar, and whether the near-term long-Usd trend that set itself at the start of December can be reversed.

Macro View:

The 4 Hour forex chart reviews below are still showing long-Usd trend reads overall, and are showing short-Usd global driver reads. Something has to give, and Friday's price action suggests that the first swing change in forex since 4th December 2009 may be ahead of us. It will take one session to set, and then the market will have revealed the pairs that are ready to make some moves. The dollar looked susceptible to selling in the previous session.

Red Flag Economics:
03:15 EST Chf Retail Sales Exp. 1.9%, Prev. 3.1%
08:30 EST Cad House Starts Exp. 161K, Prev. 159K
10:30 EST Cad Bus. Outlook Survey 
19:30 EST Aud Home Loans -0.4%, Prev. -1.4%

 

Dollar Index:  The U.S. Dollar finished sharply lower on Friday following the release of a U.S. Non-Farm Payrolls Report which showed the economy lost 85,000 jobs in December. This bearish number surprised traders who were looking for evidence that the U.S. economy stopped losing jobs in December. This was a bearish Usd session, and one that will raise questions in regard to recent Usd buying. The path of least resistance may well be short-Usd moves on Sunday/Monday.

S&P Futures: U.S. equity markets erased earlier losses triggered by the weaker than expected U.S. Non-Farm Payrolls report to close higher for the day. As the Dollar fell, traders bought up stocks as demand for higher risk assets picked up. Traders now feel that a hike in interest rates by the Fed is a long way off and the best investment opportunities are in the equity markets.

Crude Oil: The weaker than expected jobs data report helped to limit upside movement in the March Crude Oil. Traders also feel that a slowing economy will led to less demand for crude oil. Technically, this market remains vulnerable to a retracement to 78.80. The 76.50 area continues to be a main support price point, after sellers were held at bay recently. Holding above 76.50 this week looks set to trigger more speculative long orders.

Gold Bullion:
February Gold traded higher because of the weaker Dollar. Traders should watch for an acceleration to the upside following a trade through $1141.00. This move is likely to trigger a continuation of the rally with $1151.30 the first major upside objective. There was an attempt to reverse that mode in early December with bouts of profit taking. The 1095 and 1115 are near-term support area, backing any further long tests of 1150.



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