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Jobless Data Has Market On Edge

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Oct 2, 2009.

  1. mercaforex

    mercaforex New Member

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    By Mercaforex

    USD:

    The USD picked up more steam against both the EUR and GBP on a day that was tainted with widespread negative data. Today the critical Non Farm Employment Change number will be published and carries an estimate of minus -179K compared to last month’s total of minus -216K, which would make today’s figure - if it meets expectations – better than the previous report. However, and perhaps that should be spelled in capital letters, there are road posts that indicate that the Jobless statistics will worse than the forecast. The reason for that is that recent Manufacturing readings and capacity calculations still highlight a weak sector, meaning unemployment may continue to be a long term problem for the States. Yesterday the weekly Unemployment Claims came in with a poor number and missed its projection. The ISM Manufacturing PMI then followed with another uncomfortable reading of 52.6, missing the estimate of 53.9, and more significantly falling below last month’s result.
    The U.S. stock markets reacted to this news by tumbling in a rapid fashion and most of the major indexes dropped by more than 2.0%. The economic data jolted investors with yet another rationalization that optimistic sentiment may not be holding up to the math. Stabilization may have taken place but there are some disturbing barometers which signal that the recovery could be a painfully slow one. Also ready for release today will be the official Unemployment Rate and it carries a 9.8% expectation. Investors having suffered from a deluge of bad data on Thursday, will likely not show equity markets any mercy if the Jobless numbers provide further evidence that the unemployment situation is not showing any signs of improvement. The currencies stand on a rather steep cliff today and could continue to show volatility if investors are disappointed once again. The USD has pushed the EUR and GBP around the past week and if risk appetite takes a hit today, the greenback may have another good day going into the weekend.

    EUR:

    The EUR stumbled against the USD on Thursday as it was hit by two factors. The first jolt came early in the trading session when the German Retail Sales figures proved negative with a result of minus -1.5%. The second swift movement began as the equity markets began to show weakness. There will be little in the way of vital economic data from Europe today and it will certainly trade under a dollar centric cloud as traders await the jobless numbers from the States. Also looming in the background will be the sentiment that could possibly be generated this weekend via the Lisbon Treaty vote that will be held in Ireland and the upcoming G-7 meeting in Istanbul. The Irish will be asked to ratify the Lisbon Treaty and it is not clear that will take place. The G-7 meeting appears that it may prove noteworthy this weekend. Several officials from Europe including ECB President Trichet have begun to suggest in a subtle manner that they believe the EUR may be too strong for its own good while the continent tries to recover from its recession. The EUR did enjoy a very good run against the USD the past couple of months, but the last week of trading highlights that not everything is a one way road and that risk can be judged wearily at times.

    GBP:

    The Sterling continued to face strong headwinds and gotten beaten back further by the USD. This took place as the U.K. released its Manufacturing PMI survey and it came in with a figure of 49.5 compared to the estimate of 50.2, and interestingly below last month’s result of 49.7. Like the U.S. the U.K. has started to produce economic data that is raising some doubt among investors. Today the Nationwide HPI is expected to be published and has a forecasted rise of 0.8%. Also the Construction PMI release will be looked for. However like the EUR, the GBP will find itself very much under the haze of dollar centric sentiment today as the jobless report waits across the Atlantic. The Sterling has had a tough week of trading as it has moved lower against the USD as investor caution has increased.

    JPY:

    The JPY continued to gain a bit against the USD and other major currencies as international bourses continued to falter. The JPY has put the government of Japan in an awkward position as its officials have publically debated the merits and downsides of the strong currency without any clear direction. Gold managed to maintain its range around the 1000.00 USD mark yesterday even as the dollar showed additional strength against the other major currencies. Gold will be watched closely today by investors.
     
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