Forex - NFP Friday - Dollar set to defy yet another dismal Non-Farm number? Answer at 13:30 GMT.

Forex News and Events: The Jan US employment report is released at 13:30 GMT. Similar to consensus (-540k) and previous (524k), expect -525k, with the jobless rate jumping to 7.5% from 7.2% (its monthly average rise has been 0.3pp the past three months). We expect a number in-line with consensus to be overlooked by the dollar. However, if we take heed to the seasonal factor we could see the number come in better than expected as fewer workers were hired in the run up to the end of year, hence less workers to lay off as a consequence – a better number would greatly bolster the dollar and push it higher. The EURUSD traded a 1.2750 – 1.2900 range yesterday and today as the markets jitter before the major move inducing NFP’s. Initial Support for the Pair stands at 1.2750 (morning’s lows) and the start of the retracement move. The yen was sold off against the USD and other pairs as a bout of renewed short-term risk-seeking triggered stops, pushing USDJPY as high as 92.25. Since the beginning of the year, there have been several attempts at risk rallies that have also weighed on the yen, but none thus far have been sustained. The Yen weakened greatly yesterday on renewed risk appetite and a general sentiment that the BoJ has been uncharacteristically proactive in bolstering its economy – pundits expect the U.S to come out of this global crisis before the economies that failed to tackle the monetary and fiscal shortcomings in a sufficiently concerted and confident manner – the EU for example.

Today's Key Issues (time in GMT): 12:00 CAD Change in Employment (JAN) -40K vs -20.4K 12:00 CAD Unemployment Rate (JAN) 6.8% vs 6.6% 13:30 USD Change in Non-Farm Payrolls (JAN) -540K vs -524K 13:30 USD Unemployment Rate 7.5% vs 7.2%

The Risk Today: EurUsd The move from 1.3072 down to 1.2750 spanning the last 3 days has shown the un-sustainability of the Euro's momentary bull run. 1.2825 being the initial resistance (tested once this morning an 23.6% retracement on above mentioned move). Focus is on the downside as a consolidated price action and NFP today aims for 1.2707 (Feb 2nd Low) via 1.2750 – eventual mishap could see renewed EUR strength with 1.2813 and 1.2840 in sight. GbpUsd GBP/USD edges higher to 1.4577 but lacks follow through buying yet. Nevertheless, intraday bias remains mildly on the upside as long as 1.4324 minor support holds. As discussed before, a medium term bottom might be in place at 1.3053 after failing to sustain below key long term support of 1.3680. Further rally is now in favor towards 1.5722 resistance next. UsdJpy USDJPY Yesterdays Yen weakness saw the pair trade as high as 92.28 – Jan 8th high. Risk averse trades have meant that the pairs price action has been inversely traded. 91.03 stands as the initial support (50.00% retracement). Continued Yen weakness opens the doors for 91.68 then 92.00. UsdChf Pair breaks previous range to trade as high as 1.1743 and consolidating. development is consistent with the view that rise from 1.0366 is still in progress. Above 1.1743 will confirm rally resumption and target a retest of 1.2248/96 resistance zone. However, note that break of 1.1400 support will confirm that rebound from 1.0366 has completed and will bring deeper decline towards 1.0864 cluster support.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.2840 M 1.4920 S 92.28 S 1.1850 S 1.2825 S 1.4770 M 92.00 M 1.1780 M 1.2813 M 1.4734 M 91.68 S 1.1741 M 1.2788 1.4660 91.09 M 1.1726 1.2750 M 1.4650 M 91.03 M 1.1680 S 1.2707 K 1.4595 S 90.74 K 1.1400 S 1.2613 M 1.4369 K 89.56 M 1.1315 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot