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Poor Claims Data Weighs On Non-Farm Payroll Forecasts
February 04, 2010 5:16 PM CET
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G10 Advancers and Decliners vs USD |
| | JPY | 0.81 |  |  | CHF | -0.50 | | | CAD | -0.75 | | | GBP | -0.79 | | | EUR | -0.91 | | | DKK | -0.91 | | | AUD | -1.21 | | | NOK | -1.23 | | | SEK | -1.56 | | | NZD | -2.33 | |
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Global Indexes |
Current Level |
% Change |
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| FTSE 100 Index | 5'139.47 | - 2.16 | | DAX Index | 5'537.02 | - 2.38 | | SMI Index | 6'411.49 | - 2.17 | | S&P 500 Index | 1'075.36 | - 2.00 | | DJIA Index | 10'086.45 | - 1.79 | | Nikkei 225 Futures | 10'270.00 | - 0.77 | | Hang Seng Futures | 20'343.00 | - 1.31 |
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World Markets |
Current Level |
% Change |
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| Gold | 1'075.60 | - 3.08 | | Silver | 15.66 | - 4.30 | | VIX | 24.68 | + 14.26 | | Crude wti | 74.86 | - 2.75 | | USD Index | 79.88 | + 0.59 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Fri 5 Feb | --- | --- | --- | | Manufacturing production, % m/m Dec | 0.4 | 0.9 | NOK/09:00 | | Producer input prices, % m/m (y/y) Jan | 0.5 (6.3) | 0.1 (6.9) | GBP/09:30 | | Producer output prices, % m/m (y/y) Jan | 0.3 (3.7) | 0.5 (3.5) | GBP/09:30 | | Industrial production, % m/m Dec | 0.5 | 0.7 | EUR/11:00 | | Unemployment rate, % Jan | 8.5 | 8.4 | CAD/12:00 | | Change in nonfarm payrolls, thous Jan | 5 | -85 | USD/13:30 | | Unemployment rate, % Jan | 10.1 | 10.0 | USD/13:30 |
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Currency Tech |
EURUSD
R 2: 1.4030
R 1: 1.3855
CURRENT: 1.3780
S 1: 1.3750
S 2: 1.3720
USDJPY
R 2: 91.90
R 1: 91.25
CURRENT: 90.25
S 1: 90.00
S 2: 89.35
GBPUSD
R 2: 1.6080
R 1: 1.5900
CURRENT: 1.5775
S 1: 1.5750
S 2: 1.5700
AUDUSD
R 2. 0.8960
R 1: 0.8928
CURRENT: 0.8705
S 1: 0.8645
S 2: 0.8600
USDCAD
R 2. 1.0750
R 1: 1.0720
CURRENT: 1.0700
S 1: 1.0547
S 2: 1.0465
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Market Brief |
Today’s worse than expected US claims data has paved the way for an extremely interesting non-farm payroll release tomorrow. Initial claims came in at 480k (vs. 460k expected) and there were slight upward revisions to last week’s data (from 470k to 472k). Continuing claims were also higher (at 4602k vs. 4580k expected) which has negated the positive sentiment from yesterday’s better that expected ADP employment report. There remains all to play for in the number tomorrow; a Reuters poll puts consensus estimates for +5k for January, and it is imperative that the number is indeed positive for the USD to remain supported in its current bullish run. Subsequent data this afternoon included US durable goods and factory orders, both of which came in at an encouraging 1.0% MoM; helping equities recover somewhat from their lower open.
Earlier in the session we had the Bank of England’s latest meeting, where the MPC kept rates unchanged at 0.50% as expected, and also announced that there would be no further expansion to the asset purchase target beyond the current GBP 200bn. While this latter decision was in line with official consensus, there had been murmurs since the beginning of the week that the cessation of the quantitative easing programme was far less certain – especially considering the subdued UK GDP print seen last week. As a consequence, the less dovish tone of the statement prompted GBPUSD to bounce from its pre-announcement lows of 1.5803 to 1.5875.The pair was further boosted by the US claims figures but failed to break back above the 1.5900 handle, and subsequent selling interest led by EUR weakness dragged the pair back below 1.5800.
The ECB also acted in line with expectations by keeping rates on hold at 1.00%, but the mood of the press conference was slightly more dovish than anticipated. Trichet did not mention an exit strategy just yet, but revealed that this would be reviewed in March. The assessment of current conditions was that the growth outlook was moderate and inflation outlook benign, but Trichet was extremely careful not to single out Greece or Portugal for any particular scrutiny or comment. EURUSD weakness gradually gathered pace as the afternoon wore on, causing EURUSD to drop below 1.3800 for the first time in 9 months, a development made even more significant by the fact that 1.3801 coincides with the 50% Fibonacci retracement level of the rally from 1.2459 to 1.5144 in 2009. This lends support to further EURUSD downside and opens up the next targets of 1.3750 and 1.3720.
The wave of USD strength also had a profound effect on gold which plunged rapidly through $1100 levels (having earlier traded as high as $1111.80), and triggered stops all the way down through the major support level of $1174 to hit a low of $1065.80. Despite a rebound back above the major support, we remain wary that a close below $1174 would look to confirm a major descending triangle formation with a target around $925.
Looking ahead, the US non-farm payrolls already discussed are almost certain to eclipse all other data releases due; these include Norway manufacturing production, UK PPI and German industrial production.
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Kiwi Unemployment Jumps
February 04, 2010 9:11 AM CET
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G10 Advancers and Decliners vs USD |
| | JPY | 0.14 | | | | CAD | 0.10 | | | CHF | -0.13 | | | NOK | -0.18 | | | EUR | -0.21 | | | SEK | -0.22 | | | GBP | -0.22 | | | DKK | -0.23 | | | AUD | -0.27 | | | NZD | -1.52 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 10,355.98 | - 0.46 | | Hang Seng Index | 20,377.08 | - 1.66 | | Shanghai Index | 2,991.56 | - 0.40 | | FTSE futures | 5,211.00 | - 0.50 | | DAX futures | 5,672.00 | - 0.79 | | SMI Futures | 6,488.00 | + 0.15 | | S&P future | 1,093.30 | - 0.28 |
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World Markets |
Current Level |
% Change |
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| Gold | 1,105.88 | - 0.35 | | Silver | 16.27 | - 0.61 | | VIX | 21.60 | + 0.55 | | Crude wti | 76.79 | - 0.24 | | USD Index | 79.51 | + 0.12 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Germany: Factory orders % m/m (y/y) | 0.3 | 2.8 (1.3) | EUR / 11.00 | | BoE MPC Bank Rate decision, % | 0.5% | 0.5 | GBP / 12.00 | | BoE MPC asset purchase target, £ bn Feb | 200 | 200 | GBP / 12.00 | | ECB rate announcement, % | 1.00% | 1.00 | EUR / 12.45 | | ECB press conference | -- | -- | EUR / 13.30 | | Initial jobless claims, thous | -- | 470 (456) | USD / 13.30 | | Nonfarm productivity, % q/q saar | 5.6 (5.2) | 8.1 (4.0) | USD / 13.30 | | Factory orders, % m/m (y/y) | 1.2 (3.6) | 0.8 (-2.3) | USD / 15.00 |
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Currency Tech |
AUDUSD
R 2. 0.8960
R 1: 0.8928
CURRENT: 0.8803
S 1: 0.8735
S 2: 0.8645
USDCAD
R 2. 1.0720
R 1: 1.0640
CURRENT: 1.0604
S 1: 1.0547
S 2: 1.0465
EURJPY
R 2: 128.35
R 1: 126.98
CURRENT: 126.33
S 1: 125.80
S 2: 124.40
USDMXN
R 2: 13.105
R 1: 12.975
CURRENT: 12.947
S 1: 1.8295
S 2: 12.800
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Market Brief |
Risk correlated trades were weaker in the Asian session, as New Zealand labor market reports surprised to the downside. The Q4 Employment fell by 0.1% q/q and the unemployment rate climbed to 7.3% (a 10-year high) from 6.5%. While the employment data was relatively inline with market expectations, the jump in unemployment sent risk seekers running for the exits. The market had been aggressively pricing for RBNZ hikes as early as March, so these negative figures weigh heavily on the NZD. On the figures the NZDUSD gapped down to 0.7005, paused briefly, then took another leg down to 0.6960 (triggering stops below 0.7000). The USD has been gaining prior to the poor Kiwi numbers, as worries over the fiscal health of Greece and a blow out in Portuguese CDSs to a record wide 196 and stronger than expected US ADP report gave the greenback the advantage. In Australia, Retail Sales ex-inflation data for Q4 were slightly stronger, rising 1.1% q/q, while building approvals data came in significantly higher, up 2.2% m/m. The retail sales figures suggest that even with the withdrawal of government fiscal stimulus GDP, the growth in Q4 remains strong. As we have stated numerous times after the surprise RBA rate decision, we believe the central bank is underestimating the momentum in the Australian economy and will be forced to raise rates in March. In this environment, we believe the AUD should outperform.
Today's Bank of England meeting will take on a greater significance than those in the previous couple of months, as the MPC must finally announce their decision on whether to extend the QE program or allow it to expire. With the ongoing improvements in the global economy, coupled to persistent GBP weakness, it has been increasingly speculated that the central bank will decide not to extend their asset purchase target beyond the current GBP200bn. However, whilst the latter scenario would be broadly positive for GBP, the enthusiasm for bets on the UK economy has waned significantly since last week’s extremely mediocre Q4 GDP print, and the murmurs of possible UK credit rating downgrades to come. As such, we feel the bias of risks is to the downside in GBP, as the cessation of QE will struggle to neutralize pervading negative sentiment surrounding the UK, but the possibility of a further extension to the stimulus measures would be severely negative on the currency.
Overall, we expect the ECB meeting to be a non-event, but perhaps the post meeting press conference might produce some fireworks. Markets are unanimously expecting the ECB to hold rates steady at 1.00% with no change to economic outlook or exit strategy. Given that it has been only three weeks since its last meeting, there has been little change which might convince Trichet and gang to move from its loose monetary policy. Undoubtedly, there will be a question in the press conference regarding Greece and recent moves in Sovereign CDS spreads. We would expect another “absurd” rebuttal but anything less will have serious consequences for the EUR.
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ACM Advanced Currency Markets SA (hereinafter referred as ACM) is a professional financial intermediary, directly regulated by the Swiss Federal Department of Finance, Anti Money Laundering Control Authority. As forex specialist, ACM provides only currency trading via highly professional forex trading software. All customers are aware that this information or any part thereof has been prepared without taking account of your objectives, financial situation and/or needs. This information is not intended as personalized investment advice and does not constitute a recommendation. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. The analysis is based on the information which ACM finds reliable and accurate, but ACM does not assume any responsibility for any material nor for the transactions made on the basis of the information or the estimates of the analysis. ACM cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct, indirect and/or consequential loss arising from any use of this information, document or its content. All opinions and estimates constitute ACM analysis as of the data and are subject to change without notice. ACM does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions. Past performance is not a reliable indicator of future performance.
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