U.S. Non-Farm Employment Change Data to Drive USD Volatility Today

Source: ForexYard

The forex market is expected to be extremely volatile today, as the U.S. releases the results of the Non-Farm Employment Change at 12:30 GMT. The EUR Minimum Bid Rate at 11:45 GMT and U.S. Unemployment Claims at 12:30 GMT are also expected to dominate trading for the USD, EUR, and GBP crosses. Traders are advised to enter the main currency pairs now in order to profit from risk appetite.

Economic News

USD – Dollar Plummets on Release of Poor Economic Data

The Dollar index continued its decline yesterday, trading at 79.619, down from 80.179 late Wednesday. The drop followed the release of the ADP Non-Farm Employment Change which showed worse than expected results. The drop was exacerbated by China’s request to discuss the issue of a new global currency at next week’s G8 Summit in Italy.

Increased risk appetite has been dominating trading lately, despite much pessimistic economic data. Recent bullishness in the stock markets helped fuel risk appetite among investors, putting further downward pressure on the Dollar. Worse than expected results no longer automatically push investors back to the safety of the Dollar, as risk tolerance remains high on positive equity prices. Furthermore, negative data from the U.S., along with an over-expanding budget deficit and inflation fears have caused concern over the greenback’s long term prospects. As a result, this has
further dampened Dollar sentiment.

With several major news releases ahead of the July 4th weekend, including the U.S Non Farm Employment Change and Unemployment Rate due at 12:30 GMT, and the ECB Press Conference at the same time, Thursday is expected to be a volatile trading day which may intensify the current trends.

EUR – EUR Boosted By Increased Risk Appetite

The EUR continued its advance against the USD yesterday, reaching its highest level in nearly a month. The European currency received an additional boost after the release of better than expected results from German Retail Sales. Since Germany is the largest economy in the Euro-Zone, it tends to have significant effects on EUR movements.

The EUR/USD pair hit as high as $1.4201 after the release of the U.S. ADP Non-Farm Employment Change report, which showed worse than expected results. However, the EUR/USD finished trading at 1.4115, whilst the the Pound Sterling was at $1.6464 from $1.6449.

Traders should pay close attention to the ECB Press Conference at 12:30 GMT as monetary policy and economic outlook will be discussed. Although the Interest Rate is expected to remain unchanged at 1%, the statement will provide insight to the Bank’s new covered-bond purchase program, as well as the progress of the quantitative easing program. This will provide direction for the EUR by possibly extending its recent gains.

JPY – JPY Gains against USD Ahead of Crucial U.S. Data Releases

The Yen gained against the Dollar ahead of the release of the U.S Non Farm Employment Change and Unemployment Rate which may show that unemployment in the U.S rose to the highest level in 25 years. To a certain extent, this spurred demand for the safety of the JPY. Traders should be aware that the USD/JPY pair will be the main pair to watch today as data is released from the U.S.

The Japanese currency has been suffering recently due to increased optimism and risk appetite among investors, who traded the relatively safe JPY for higher yielding riskier currencies. Although risk tolerance remains high in the market, worse than expected results from the U.S and Euro-Zone may help extend the JPY’s gains throughout the day.

Crude Oil – Crude falls Below $70 on Release of Inventories Data

Crude Oil fell by over $2.50, or 5%, to $69.01 a barrel on Wednesday. The drop came after the U.S. Energy Information Administration (EIA) released a report showing that Crude Oil Inventories are 18.3% higher than last year. Despite falling inventories in the past 4 weeks, demand continues to be weak, whilst supply remains abundant.

Despite recent gains in the equity markets and the continued weakness of the Dollar, Oil has had difficulties sustaining prices above $72. This is as demand continues to lag and inventories remain high. Today’s trading session may provide some boost to Oil prices as U.S unemployment data which is set to be released today may exacerbate the Dollar’s recent bearish trend.

Technical News


The EUR/USD pair experienced much bullishness in yesterday’s trading, as it hit the 1.4200 mark. However, the pair has dropped since then, and the pair currently stands at 1.4120. The daily chart shows the pair trading in neutral territory. However, the chart’s 4-hour Stochastic Slow and hourly MACD signal that this downward momentum may continue. Going short with tight stops could lead to big profits today.


The cross finished yesterday’s trading in neutral territory, and relatively unchanged at 1.6464. If you look at the daily chart’s RSI, we can see that the pair is in the overbought territory, and a sharp downward move could occur anytime soon. Entering this trend at an early trade may turn out to pay off as Thursday’s trading gets under way.


The pair currently stands at the 96.60 level. It seems that USD/JPY’s recent bearishness may be short lived, as the chart’s 4-hour RSI indicates that there is still steam left in the pair. Additionally, the chart’s daily Stochastic Slow signals that we may be facing an upward trend today. Going long with tight stops may be a wise choice today.


The pair has experienced much volatility in recent days, range trading between the 1.0700 and the 1.0920 levels. The weekly chart’s Slow Stochastic signal the pair will go bearish today. Whereas the hourly chart’s MACD signals an upward trend to take place for the coming day. Entering the pair when the signals are clearer may turn out to be a wise choice today.

The Wild Card – Crude Oil

Crude Oil has been hit badly in recent days, and currently stands at $69.20 a barrel. The daily chart’s Stochastic Slow supports a further bearish move for the commodity in today’s trading. This is also supported by the daily chart’s MACD. Going short with tight stops may turn out to be the safe bet for forex traders today.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

ADP Employment shows 473K job losses. Pending Home Sales rise. US Dollar trading lower in FOREX.

By CountingPips.com

U.S. employment data was released today in the form of the ADP National Employment Report and showed that U.S. private employment declined by less than the previous month but by more than expected. June’s nonfarm private employment fell by 250150bluecharts473,000 following the revised May decline of 485,000 jobs. May’s data was revised downwards from the original release of 532,000 jobs lost.

June’s data was worse than the decline of 394,000 jobs the market forecasts were expecting but was better than the three month average of 492,000 jobs lost in April, May and June.

The market-moving US Nonfarm Payrolls report for June is to be released tomorrow at 12:30 pm GMT because of the US independance holiday this week with market forecasts predicting a decline of 365,000 jobs after May’s 345,000 decrease.

ISM Manufacturing data improves but not at growth levels yet.

U.S. Manufacturing data, released today by the Institute for Supply Management, improved in June from May but showed that manufacturing activity failed to grow for the seventeenth straight month. June’s ISM Report On Business index readings for economic activity were at 44.8 percent following May’s 42.8 percent level. A score above 50 percent is considered to be growth and less than 50 percent is considered to be a contraction. The June score just about matched economic forecasts which were expecting the ISM index reading to register 44.9 percent. The overall economy, according to the ISM index, has expanded and grew for the second consecutive month in June after seven straight declining months.

Norbert J. Ore, chair of the ISM Business Survey Committee, commented on the report saying, “Manufacturing continues to contract at a slower rate, but the trends in the indexes are encouraging as seven of 18 industries reported growth in June. Most encouraging is the gain in the Production Index, which is up 12.1 percentage points in the last two months to 52.5 percent.”

Pending Homes Sales in US increase.

U.S. Pending Homes sales rose for the fourth straight month in May according to the monthly report produced by the National Association of Realtors. The NAR report showed that pending home sales contracts signed by buyers increased 0.1 percent in May following a revised 7.1 percent increase in April. May marked the first time since October 2004 that pending home sales had increased for four consecutive months.

Market forecastors had predicted the sales data would show no change or remain flat for the month. The pending home sales level is 4.6 percent above the May 2008 level.

NAR chief economist Lawrence Yun commented in the report about the increased sales figures this month, “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”

US Dollar lower in forex trading.

The U.S. dollar has been under pressure in forex trading against the major currencies so far today. The dollar has fallen against the euro, Australian dollar, British pound, Japanese yen, Swiss franc and Canadian dollar while trading slightly higher against the New Zealand dollar.

The euro has advanced versus the dollar as the EUR/USD has gone from today’s 1.4034 opening exchange rate at 00:00 GMT to trading at approximately 1.4176 in the afternoon of the US trading session at 1:17pm EST according to currency data by Oanda.

The dollar has decreased against the Japanese yen after two straight increasing days as the USD/JPY has edged down from its 96.77 opening to trading at 96.42.

The British pound has increased today versus the American currency as the GBP/USD has gone from 1.6451 to trading at 1.6519 dollars per pound. The dollar has fallen against the Canadian dollar after the USD/CAD’s opening at 1.1616 earlier today to trading at 1.1470 later today.

The Australian dollar has traded higher versus the USD as the AUD/USD trades at 0.8096 after opening today at 0.8060 while the New Zealand dollar has fallen slightly versus the USD and trades at 0.6438 after opening at 0.6452.

Finally, the USD has declined against the Swiss franc today as the USD/CHF has fallen from the 1.0858 opening to trading at 1.0722.

USD/CAD Chart – The US Dollar fell sharply today against the Canadian Dollar in Forex Trading before finding support around the 1.1450 level.

Today's Forex Chart
Today's Forex Chart

ADP Employment Data to Drive the Majors Today

Source: ForexYard

The surprise drop in consumer confidence in the United States yesterday has resulted in a sudden buy-up in USD as investors flock to safe-havens. With a market that appears to be lacking a clear direction recently, major reports such as the CB Consumer Confidence report yesterday, and today’s ADP Non-Farm Employment Change report become that much more important to watch as more investors await their release before trading.

Economic News

USD – USD Trades Higher on Economic Outlook

The greenback gained Tuesday as a report on U.S. home prices showed that the pace of price declines may be slowing and manufacturing data from June came in slightly better than expected. The Dollar may extend its gains versus the EUR after a report showed an unexpected drop in U.S. consumer confidence for June, increasing demand for the safety of the world’s main reserve currency.

The USD traded at 1.4035 versus the EUR, following a 0.4% gain yesterday. The dollar also fetched 96.35 yen following a 0.3% advance. Tuesday’s data gave investors more reasons to buy the U.S Dollar. For months, improvements in the outlook for the economy, financial markets or other companies has led to stock gains and weighed on the USD, taken as a signal of reduced demand among investors to hold the safe-haven currency.

However, analysts have said that the Dollar may be near a turning point, after trading in a pattern closely correlated with equity moves. Investors have sold U.S. Dollars recently as stock markets and oil prices rose on an upbeat view for prospects of a global economic recovery, hurting demand for the greenback as a safe haven.

Investors now await the U.S. government’s high-profile monthly employment report. The jobs data is due on Thursday as U.S. financial markets will be shut on Friday for Independence Day.

EUR – EUR Holds Steady vs. Greenback and Rallies against JPY

The EUR gained versus the U.S Dollar on speculation European Central Bank (ECB) policy-makers will today signal that the central bank will keep Interest Rates on hold into next year to aid an economic recovery. ECB member Axel Weber said last week that the central bank has used up its scope to cut Rates. Policy-makers will leave the benchmark rate unchanged at this week’s meeting, according to analyst predictions.

There is also an improving sentiment in the Euro-Zone’s economic conditions. European economic confidence rose more than economists forecast in June, the European Commission in Brussels reported yesterday, signaling the region’s slump is abating. Analysts predict that the ECB will keep Rates at 1% for the foreseeable future. And that might turn the EUR further on the upside.

The European currency has advanced the most in 4 months against the Yen, last traded at 135.56 yen from 135.21 yesterday. When it reached 135.96 for a brief stint yesterday, this was the highest level reached since June 15. The EUR has risen 7.1% versus the Japanese yen this year and doesn’t seem to be losing any momentum.

JPY – Yen Declines as Investors Dump Safety Demand

The Japanese Yen weakened against the EUR and the Dollar yesterday after a report showed China’s manufacturing expanded for a 4th consecutive month, dampening demand for the relative safety of Japan’s currency. The JPY fell to 135.80 per EUR and weakened to 96.95 per U.S. Dollar from 96.36. The Yen also fell against 15 of the 16 most-traded currencies after an Australian report showed retail sales climbed for a 3rd month, giving investors more confidence to purchase higher-yielding assets.

Although, the Bank of Japan’s (BOJ) June Tankan corporate survey showed on Tuesday that big manufacturers’ sentiment pulled back from a record low hit 3 months ago, the improvement was smaller than forecast. The Yen edged down against the Dollar after the news but the market’s reaction was subdued overall as investors decided that it offered no surprise.

Analysts said that the market has considered all the positive factors that have come out and is starting to react more to negative factors. The market is lacking clear direction and is likely to stay in an adjustment period for now.

Crude Oil – Crude Oil Momentum to Rise Further

Crude Oil rose above $70 a barrel after an industry report showed the biggest decline in crude inventories since September in the U.S., the world’s largest user of the fuel. Also today, the Energy Information Administration (EIA) report will probably give a better direction to the market.

A U.S. Energy Department report today will likely show Crude Oil stockpiles declined 2 million barrels, according to economists’ estimations. A fall in crude inventories may cause the commodities market to move higher, and will reinforce Crude to stay at or go above current levels.

Oil prices yesterday spiked above $73 a barrel, which stood as the June high for more than 2 weeks, as the Dollar declined and escalating militant attacks in Nigeria raised concern that supplies may be disrupted. Crude Oil is set to extend gains amid this week’s volatility and may reach the $76 a barrel level.

Technical News


This pair currently lacks clear direction. With most indicators either floating in neutral territory, or giving off mixed signals, this pair continues to trade in a distinct range. Buying on lows and selling on highs within this range is the most preferable strategy in this environment.


There is a distinct bullish cross on the 4-hour chart’s Slow Stochastic and an imminent bullish cross on the hourly chart’s MACD. These two signals together indicate an impending bullish correction to yesterday’s sharp downward movement. Going long might be wise today.


Yesterday’s volatile bullish movement in this pair has pushed the RSI on the hourly and 4-hour charts into the over-bought territory, representing the presence of downward pressure. The fresh bearish cross on the 4-hour chart’s Slow Stochastic supports the notion of a downward correction. Going short with tight stops appears to be preferable.


Almost all indicators on this pair show neutrality as the price floats near the 1.0850 price level. With a bearish cross on the hourly MACD and a bullish cross on the 4-hour MACD, the direction of this pair is uncertain. Waiting for a clearer signal might be a good choice today.

The Wild Card – EUR/GBP

The price of this pair has been trading flat these past several days. However, the Bollinger Bands on the hourly and daily charts are tightening, signaling an impending volatile jump. With a bearish cross on the hourly MACD and the 4-hour chart’s Slow Stochastic, this volatile jump may very well be bearish. Forex traders have a great opportunity to enter early sell positions before this jump takes place and ride out the downward slope for profits!

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.