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ADP And Kohn Will Be Market’s Focus

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Sep 30, 2009.

  1. mercaforex

    mercaforex New Member

    Jul 1, 2009
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    By Mercaforex

    The USD turned in a rather mixed day of trading as it mirrored what was taking place in the broad marketplace. The greenback showed early session strength on Tuesday but as the day progressed it began to give back its gains. Wall Street also turned in a rather cautious finish in negative territory albeit not in a dramatic fashion. Economic data from the U.S. was sparse with the CB Consumer Confidence survey reporting a negative 53.1 reading, below the estimate of 57.0. The S&P/CS Composite-20 HPI was also made public and turned in a figure of minus -13.3, which was a slight improvement per the minus -14.3% forecast. Today the U.S. data and risk events will grow with the ADP Non Farm Employment Change numbers projected to be better than the previous outcome. Also the Chicago PMI data is on schedule and anticipated to improve. The jobless picture in the States remains a focal point for the public and politicians, today’s ADP statistics will set the table for Friday’s critical Non Farm Employment Change government report.

    Investors will keep their ears on a panel discussion that the Cato Institute will have today with Federal Reserve members, among them Donald Kohn, who are going to participate in a talk about the Fed’s ‘exit strategy’ from this economic crisis. The crucial aspect that could come from this conference will be talk about interest rates and just how long the Fed believes they will have to keep the rates at these historically low water marks. The currency market and particularly the USD have shouldered the burden of risk appetite and the battle continues to rage. In less than inspiring news yesterday, the FDIC was being reported to be bringing forth a proposal which will make its participating banks pay for their ‘securitizations’ a whooping three years in advance. There were also rumblings that CIT Corp. which had problems last year may finally succumb to their troubles and allow bondholders to take over the company. Thus we are left to watch a stock market that will probably remain nervous and on a hair trigger. The USD having turned in rather interesting range movement yesterday, will find that it gets tested by traders who are willing to take a stand amidst this debate of sentiment.

    The EUR battled its way back to an even level as Tuesday’s trading came to an end. Having shown weakness early in the day the EUR did climb back from its lows against the USD. The European Consumer Confidence reading was released yesterday and turned in a number of minus -19, a slight improvement over the projection of minus -21. Today the German Unemployment Change figure is due and is anticipated to be 19K. The European CPI Flash Estimate will also be published and is expecting an outcome of minus -0.2%. The EUR has had a good showing the past few weeks against the greenback but the last few days have not been stellar. The question for EUR traders will focus on its recent downward momentum compared to its recent highs only a short while ago. Europe still has many economic concerns shadowing it however it has benefited from risk appetite increasing. The EUR finds itself at an interesting juncture now and may find that it continues to find pressure if equity markets slip.

    The Sterling continued to be taken lower as Tuesday trading began, but as the day progressed the GBP found its footing and improved. The Sterling has been the most volatile of all major currencies against the USD the past week and a half. The U.K. released its Current Account data yesterday and turned in a disappointing number of minus -11.4 billion compared to the estimate of minus -7.7 billion. Also the Final GDP figure was published and it met expectations with a mark of minus -0.6%. Mortgage Approval data and GfK Consumer Confidence survey were released too and both showed some improvement. Today will be a very light day of economic statistics for the U.K., however tomorrow the Manufacturing PMI is on schedule along with the seemingly always tentative Halifax HPI. The data from the U.K. continues to give investors mixed signals. Signs of stability have certainly increased but questions about real growth continue to be complex. The Sterling has traded as if on a rollercoaster the past week and a half and this might not change today.

    The JPY moved in a rather tight range on Tuesday against the USD as nervous equity markets exhibited caution. With many contradictory statements being made from a wide range of Japanese officials concerning the growing strength of the JPY, investors are basically left with their own sentiment to gauge as they determine positions based on risk sentiment. Gold picked up a bit of ground on Tuesday as the USD gave back some of its gains later in the day. The precious metal finished around 996.00 USD. The JPY is hovering near its highs against the USD and until it is pushed back will continue to find takers.

    Expecting Non Farm Payrolls, Dollar Weakness On The Horizon

    The S&P 500 did nothing spectacular yesterday. We opened at 1066.4, hit a high of 1068.33, made a low of 1057.83 and closed at 1060.74. In the grand scheme of things there is still strength in this market, we simply corrected a few points shy from a full 50% Fibonacci retracement. If the dollar continues to weaken as expected this market should climb higher and push past its previous highs of 1080.15. However, be vigilant as ADP comes out today and we are looking forward to Non Farm Friday. Support 1060.1, 1055.1, 1053.5, 1041.2, Resistance 1066, 1074.77, 1080.2

    The point of looking at this gold chart is simple. As a trader you must always try and identify the market you are trading. Is it trending, or ranging. If it’s ranging you must trade the range in a way that you do not get chopped up, getting in and out of trades, constantly switching trade direction, long short, short long etc. This 2 hour chart shows us an example of just that. The trade here would be to buy the bottom of the range, or sell the top of it. In such a way one is able to reduce their risk, and actually hold onto the trade, get out of some of their position near support or resistance, and hold the rest in anticipation of a breakout. Support 999, 997.35, 996.42, 989.95, 984.7, 982.4, 971.75 Resistance 999.57, 1005.9, 1009.4, 1011.9, 1018.55.

    We are seeing some strength come back into the Euro after losing 3 cents over the last few trading sessions. The last three candles were kept up by some nice buying. This last candle is showing strength and the way things are shaping up right now it looks like it will be a green day for the EUR/USD. The Dollar has been acting relatively weak over the last couple of trading sessions. However, with ADP today and Non Farm later this week things could turn on a dime. Support 1.4646, 1.4612, 1.4560, 1.4526, 1.4449 Resistance 1.4708, 1.4719, 1.4766, 1.4823 1.4844.

    With a weaker USD on the horizon, the Canadian has been doing its best to push higher. This currency pair hit a high two days ago and has been dropping ever since. We are currently trading almost 3 cents lower, and the market is showing definite signs of weakness. On the day chart we are trading in a range but have shown bearish signs. On the 2 hour chart we are in a serious down trend with some consolidation on the horizon. Will probably hold around the 1.0730, 1.0770 range for awhile before we continue to push lower. Support 1.0659, 1.0589, 1.0538, 1.0399, 1.0297 Resistance 1.0768, 1.0805, 1.0852, 1.0926, 1.0992

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