USD/JPY Fundamental Analysis February 9, 2012, Forecast

Economic Events: (GMT)

There are no major economic events, reports or data expected in Asia on Thursday

13:30     USD      Initial Jobless Claims                                    388K                      367K                     

 13:30    USD      Continuing Jobless Claims                          3525K                    3437K     

Initial and Continuing Jobless claims measures the number of individuals who filed for unemployment insurance for the first time or renewed during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.               

Analysis and Recommendation: ( close of Asian session )

USD/JPY was trading at 77.14 with the dollar up 0.25% against the yen.

As was expected the US dollar rebounded against most of the world’s major currencies on Wednesday, reversing earlier losses when the euro firmed on word that Greece and its lenders were finalizing details needed for Athens to access bailout funds. Investors over reacted to news in the Financial Times stating that the Prime Minister was putting the final touches on a finished deal. Later in the evening it was announced that the meetings were delayed until Wednesday, signaling additional problems.

Prior Economic Report Results

 AUD

Interest Rate Decision 

4.25%

4.00% 

4.25% 

 

 

AUD

Westpac Consumer Sentiment 

 

 

2.40% 

 

 

 

 USD

 10-Year Note Auction 

 

1.900% 

 

 

NZD

Employment Cha (QoQ) 

0.4% 

 

0.2% 

 

NZD

Unemployment Rate 

6.5% 

 

6.6% 

 

 

Scheduled Sovereign Bond Sales

Feb 09  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 09  15:30  Sweden  Details I/L bond auction on Mar 23

Feb 09  16:00  US  Announces auctions of 30Y TIPS on Feb 16

Feb 09  16:30  Italy   Details BTP/CCTeu auction on Feb 14

Feb 09  18:00  Italy   Auctions 30Y Bonds

Feb 10  11:00  Belgium  OLO auction

In The Eyes of the Experts – 7/2/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • NZD
  • AUD
  • CAD

 

Currencies watch for Short:

  • CHF
  • JPY
  • GBP

 

Today’s important times (GMT+2):

  • 12:45 CHF
  • 15:30 CAD
  • 17:00 USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.2981    1.3049    1.3094    1.3162    1.3208   
GBPUSD 1.5681 1.5746 1.5793 1.5857 1.5904
USDJPY 76.30 76.43 76.61 76.73 76.91
USDCHF 0.9127 0.9160 0.9211 0.9244 0.9295
USDCAD 0.9895 0.9929 0.9960 0.9993 1.0025
AUDUSD 1.0644 1.0681 1.0718 1.0755 1.0793

USD/JPY Fundamental Analysis February 8, 2012, Forecast

Economic Events: (GMT)

There are no economic events scheduled in Japan or the US that should effect the markets, today.

Analysis and Recommendation: ( close of Asian session )

USD/JPY was trading at 76.64. The dollar continued to firm as the Greek crisis continues on.

A news release this morning is still being calculated into the markets. It seems that Japan’s government and central bank conducted 1 trillion yen ($13 billion) worth of unannounced forex intervention in early November, according report. Japan’s last public move into the forex markets was on Oct. 31, but the report cited unnamed sources as saying further action took place after that date to seek to depress the value of the yen. Early Tuesday, the dollar was buying ¥76.56.  Later Dow Jones Newswires report said foreign-exchange that  Japan sold ¥8.07 trillion on Oct. 31 and another ¥1.02 trillion in the days following, with the intervention continuing through Nov. 4. 

The dollar will continue to move upwards today with little economic news due.

Economic Data results prior trading 

 AUD

Retail Sales (MoM)

-0.1% 

      0.2%  

    0.1% 

EUR

German Factory Orders (MoM) 

1.7%

0.5% 

-4.9% 

CAD

Ivey PMI 

64.1

57.8 

63.5 

NZD

Labor Cost Index (QoQ) 

0.7%

0.5% 

0.5% 

 

Scheduled Sovereign Bond Sales

Feb 08  10:10  Sweden  Nominal bond auction

Feb 08  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Feb 08  10:30  Swiss  Bond auction

Feb 08  16:30  Italy   Details BOT auction on Feb 13

Feb 08  18:00  US  Auctions 10Y Notes

Feb 09  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 09  15:30  Sweden  Details I/L bond auction on Mar 23

Feb 09  16:00  US  Announces auctions of 30Y TIPS on Feb 16

Feb 09  16:30  Italy   Details BTP/CCTeu auction on Feb 14

Feb 09  18:00  Italy   Auctions 30Y Bonds

Feb 10  11:00  Belgium  OLO auction

USD/JPY Forecast February 7, 2012, Technical Analysis

USD/JPY rose for the session, but gave up almost all of the gains by the time the session ended on Monday. The 77 level proved as strong resistance, and this shouldn’t have been a surprise as both the trend is down, and the area was once significant consolidation.

The candle shape for the session in a shooting star, and this will of course signal bearishness going forward. However, the pair is currently one that is being manipulated by the Bank of Japan as that central bank has been intervening recently. The moves have happened in the general area that we are sitting in where the interventions have happened.

The Bank of Japan has just recently started making comments about the value of the Yen, and this is normally the first step in their process of intervention. They always seem to try and talk the markets down first, and then when that doesn’t work – the sell the Yen in massive amounts. So while the set up looks good for a sale at this point, this isn’t the pair you want to sell. The market simply isn’t a free one, and as a result it can’t be traded as such.

The 7650 area is just below, and the level has been a support area as of late, therefore it isn’t too much to think that it will cause a reaction. In this case, the former support should be resistance. However, as we stated above – you simply cannot sell. In fact, we are looking for a reason to buy this pair at the moment. The lower we go, the more likely we are to buy as the BoJ will have to step in sooner or later. The interventions almost always happen at the Asian open, so we will be quite comfortable opening our position based upon a daily close candle (GMT, or thereabouts.) that shows support in this pair. The 75.50 level was the actual point that triggered the BoJ to step in last time, and the close we get to that mark – thew more likely a move will be made in our opinion. 

USD/JPY Forecast February 7, 2012, Technical Analysis
USD/JPY Forecast February 7, 2012, Technical Analysis

USD/JPY Fundamental Analysis February 7, 2012, Forecast

Economic Events: (GMT)

No economic events scheduled today in Japan

03:30     AUD       Interest Rate Decision 4.00% 4.25%

 03:30    AUD       RBA Rate Statement     

Reserve Bank of Australia (RBA) board members come to a consensus on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.

A higher than expected rate is positive/bullish for the AUD, while a lower than expected rate is negative/bearish for the AUD.                                                                                    

15:00    USD      Fed Chairman Bernanke Testifies

Federal Reserve Chairman Ben Bernanke (February 2006 – January 2014) is to testify on the economic outlook and recent monetary policy actions before the Joint Economic Committee, in Washington DC. The testimony is in two parts; the first is a prepared statement, then the committee conducts a question and answer session. The Q&A portion of the testimony can see heavy market volatility for the duration.  

23:30     AUD       Westpac Consumer Sentiment                                 2.40%   

The Westpac Consumer Sentiment Index measures the change in the level of consumer confidence in economic activity. On the index, a level above 100.0 indicates optimism; below indicates pessimism. The data is compiled from a survey of about 1,200 consumers which asks respondents to rate the relative level of past and future economic conditions.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.           

Analysis and Recommendation: (close of Asian session )

USD/JPY was trading 76.67 in a crazy session. The pair were trading down at 76.50 until worries began to surface in the early morning hours in Europe.

 The USD has picked up some tentative strenght on worries about Greece. After committing to have a done deal no later then Sunday night, there is no deal on the table and negotiations and talks continue. The Greek Prime Minister seems to be losing control. Worries continue to grow as the EU steps up pressure to resolve the problems.

Bank of Japan Governor Masaaki Shirakawa said that he acknowledges that the economy is in a severe situation due to deflation and a strong yen, signalling the central bank’s readiness to offer further monetary stimulus if Japan’s fragile economic recovery is threatened.

But Shirakawa pushed off criticism that the BOJ was not easing monetary policy as quickly as the Federal Reserve, stressing that both central banks share similar goals and look not just at price growth but at ensuring sustainable economic growth.

“We acknowledge that the problems Japan faces such as the current deflation and yen strength are very severe,” Shirakawa told an upper house budget committee meeting on Monday. “The BOJ will implement appropriate steps through close examination of the economic situation,” he said.

Scheduled Sovereign Bond Sales

Feb 06  10:10  Norway  Bond auction

Feb 07  09:00  Netherlands Eur 5.0bn Jul 2022 DSL

Feb 07  10:10  Greece  6M T-bill auction

Feb 07  10.30  UK  Auctions 1.75% 2017 conventional Gilt

Feb 07  15:30  UK  Details gilt auction on Feb 16

Feb 07  18:00  US  Auctions 3Y Notes

Feb 08  10:10  Sweden  Nominal bond auction

Feb 08  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Feb 08  10:30  Swiss  Bond auction

Feb 08  16:30  Italy   Details BOT auction on Feb 13

Feb 08  18:00  US  Auctions 10Y Notes

Feb 09  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 09  15:30  Sweden  Details I/L bond auction on Mar 23

Feb 09  16:00  US  Announces auctions of 30Y TIPS on Feb 16

Feb 09  16:30  Italy   Details BTP/CCTeu auction on Feb 14

Feb 09  18:00  Italy   Auctions 30Y Bonds

Feb 10  11:00  Belgium  OLO auction

Asia Monday View

Amid signs of strength in the U.S. economy, copper and crude-oil futures jumped in regular trading on Friday and commodity-linked stocks were broadly higher today in Asia. Gold continued to decline. The USD surged on Friday with the release of the economic data but peaked and then began to drop losing steam quickly

Asian shares climbed on today, with commodity producers, exporters and financials higher after indications that the U.S. economy is improving.

Japan’s Nikkei Stock Average was up 1%, South Korea’s Kospi marched 0.4%, while Australia’s S&P/ASX 200 index shot up 1.1%. Hong Kong’s Hang Seng Index moved upward 0.6% while the Shanghai Composite pushed up 0.2%.

U.S. stocks ended Friday’s session with sharp gains after the release of data showing the U.S. economy added more jobs than expected in January and the jobless rate fell to a three-year low of 8.3%

The better-than-expected U.S. January jobs report released at the end of last week helped to buoy risk appetite as securities continued to rise. However, there is plenty of event risk on the docket this week, not least of which is the Greek debt and bailout negotiations, which have yet to be agreed upon.

Falling unemployment in the U.S. is likely to be good news for Asia, as it suggests stronger consumer demand for the region’s exports of clothing, cars, consumer electronics and other goods.

In Tokyo, the Nikkei hit 8,949.32— its highest intraday level since Oct. 31 — before settling slightly lowers. Hong Kong’s Hang Seng was also off its daily high, as investors began to cash in some of their investments as talks to prevent Greece from defaulting on its massive debt pile dragged on.

Hitting 21,000 and now falling as there is profit-taking, because there is still potential bad news from Greece. The Greek debt talks are still going on, and no one knows if significant bad news will come out of there.

The Dow Jones rose 1.2 percent to close at 12,862.23, its highest mark since May 19, 2008, about four months before Lehman Brothers investment bank collapsed.

The S&P added 1.3 percent to 1,344.90, its highest close since last summer. The Nasdaq Composite added 1.6 percent, to 2,905.66, its highest since in 11 years.

Past, Present and Future.. Central Banks Decisions

During a speech before the House Budget Committee held by Ben Bernanke in Washington this past week, the Federal Reserve Chairman stated the importance of pushing the US fiscal policy on a sustainable path. “Interest rates can sour quickly if investors lose confidence in the ability of the government its fiscal policy,” he pointed out.

Bernanke warned that the strength of recovery in the US was “frustratingly slow” and that reducing debt should be of crucial importance, as its current levels make the economy more susceptible to shocks. The Chairman emphasized that attaining a sustainable government debt to national income ratio should be a top priority on the fiscal policymakers agenda.

Bernanke also listed the Eurozone crisis as an important risk to the US economy. He said that all the necessary steps will be taken to protect the US financial system from the fallout.

Bank of Japan Governor Masaaki Shirakawa said presently that he acknowledges that the economy is in a severe situation due to deflation and a strong yen, signalling the central bank’s readiness to offer further monetary stimulus if Japan’s fragile economic recovery is threatened.

 But Shirakawa pushed off criticism that the BOJ was not easing monetary policy as quickly as the Federal Reserve, stressing that both central banks share similar goals and look not just at price growth but at ensuring sustainable economic growth.

“We acknowledge that the problems Japan faces such as the current deflation and yen strength are very severe,” Shirakawa told an upper house budget committee meeting on Monday. “The BOJ will implement appropriate steps through close examination of the economic situation,” he said.

In the near future The chance of another interest rate cut by the Reserve Bank of Australia tomorrow is decreasing. Until recent  local economic data, the odds were heavily in favour of the RBA making it three rate cuts in a row when its monetary policy board meets.

Surprisingly strong jobs news from the US, though, and broad-based market rallies since the start of the year have given the central bank scope to delay another cut.

The Bank of Englands’s Monetary Policy Committee is set to come forward in the future (Thursday)  and state that it is expanding its Quantitative Easing programme from £275bn to £325bn. Several members of MPC signalled at their January meeting that they would vote for a further round of QE this month

USD/JPY Weekly Fundamental Analysis February 6-10, 2012, Forecast

Economic Events:  (GMT)

Feb. 06

CAD

Ivey PMI 

 

 

NZD

Unemployment Rate 

 

Feb. 07

AUD

Interest Rate Decision

 

 

AUD

RBA Rate Statement

 

Feb. 08

USD

FOMC Meeting Minutes 

 

Feb. 09

GBP

Interest Rate Decision 

 

 

EUR

Interest Rate Decision

 

 

USD

Initial Jobless Claims

 

 

EUR

ECB Press Conference 

 

Feb. 10

CNY

Chinese CPI (YoY)

 

 

CAD

Trade Balance 

 

 

USD

Trade Balance

 

 

Rule:

The USD/JPY foreign currency exchange rate is the price of one U.S. dollar – the base currency – in terms of Japanese yen – the quote currency. For example, a bid/ask quote of 89.29/89.32 means that one U.S. dollar can be bought for 89.32 yen and one U.S. dollar can be sold at 89.29 yen.

If the U.S. dollar is expected to appreciate against the yen, then the above quote might rise to say, 89.73/89.76. The forex strategy in this case would be to buy USD/JPY. If, on the other hand, the U.S. dollar is expected to depreciate against the yen, then the above quote might fall to say, 88.68/88.71. The forex strategy in this case would be to sell USD/JPY.

In the USD/JPY trade, trying to pick tops or bottoms during that time would have been difficult. However, with the bull trend so dominant, the far easier and smarter trade was to look for technical opportunities to go with the fundamental theme and trade with the market trend rather than to trying to fade it.

Against the Japanese yen, whose central bank held rates steady at zero, the dollar appreciated 19% from its lowest to highest levels. USD/JPY was in a very strong uptrend throughout the year, but even so, there were plenty of retraces along the way. These pullbacks were perfect opportunities for traders to combine technicals with fundamentals to enter the trade at an opportune moment. 

Daily range average : 80-90 pips
Best time to trade: Asian Session (2400 GMT – 0900 GMT) 
Some factors affecting the USD/JPY rate: 

  • The interest rate differential between the Bank of Japan(BoJ) and the Federal Reserve
  • Japanese government intervention to maintain their currency sends USD/JPY lower

 

Analysis and Recommendation:

The USD/JPY ended the week at 76.61opening at 76.22

The markets went on a rollercoaster ride on Friday after the U.S. Labor Department reported that 243,000 jobs were added in January and the unemployment rate dipped to 8.3%.

The markets all week have been reacting only to news and economic reports. US jobs data and unemployment figures surprised the market this week, adding 243k jobs and unemployment dropping to 8.3%. Overall this was a strong week for the US and the greenback.

After reacting to the news and pushing the dollar up against all major currencies, the markets realized that this would reduce the need for Fed intervention, diminishing the chances of more QE or changes in monetary policy. Compounding this with more craziness is Greece, the USD gave back some of its gains.

Greece is still not resolved and the special meeting of the EU that was scheduled for Monday to review the Greek proposal has been cancelled.

There are several problems, which include Germany wanting to have more control over the Greek budget in the future, since it will be mostly German taxpayers who will be funding the bailout. Also the Greek politicians are not supportive of the addition austerity measures, facing elections in April; many political leaders are more concerned with re-election that demands from the EU and IMF.

The Greek Prime Minister said in a statement on Saturday, that the deal will be concluded by the end of the Sunday, satisfying politicians, creditors and the EU, ECB and IMF. The markets will await this new agreement.

The U.S. dollar was boosted on Friday, after stronger-than-forecast U.S. employment data dampened expectations that the Federal Reserve will implement fresh monetary easing measures to stimulate growth.

Also on Friday report showing a greater-than-expected expansion in the U.S. service sector in January also boosted the greenback.

On Thursday Fed Chairman Ben Bernanke said the economy has shown “signs of improvement” but warned that the outlook remained “uncertain”.

The dollar continued to strengthen against the yen

Watch carefully for BoJ intervention.

Strength:

1) US- Jan Payroll gains show big upside surprise of 243k, about 100k more than expected, unemployment rate falls to 8.3%

2)  US- ISM services index rises to best since Feb ’11

3)  US-ISM manufacturing up 1 pt but touch less than expected

4) US -Jan vehicle sales at 14.1mm is best since clunker month in Aug ’09 and the most since May ’08 before that

5) US – savings rate rises to 4% from 3.5%

6) US -Initial Jobless Claims fall 12k

7) Germany -unemployed fall again, rate at 6.7%

8 ) UK- manufacturing and services PMI figures both rise

9) Eurozone- manufacturing and services PMI in line with initial

10) Portuguese bond yields fall from highs, Italian yields lower too with Spain flat

11)China – manufacturing PMI stays above 50, Taiwan and South Korea rise but remain below 50

12) India – manufacturing and services PMI both jump

Weakness:

1) US- Jan Consumer Confidence falls almost 4 pts to 61.1, well below expectations of 68 as labor market answers soften and those that plan to buy a home falls to lowest since Aug and those that plan to buy a car down at lowest since Oct ’10

2) US -CS home price index falls to lowest since Feb ’03

3) US -MBA said refi’s fell 3.6% and purchase apps were down 1.7%

4) Canada – Jan jobs report disappoints

5) China – PMI services index falls to 52.9 from 56, the 2nd lowest since Feb ’11

6) Taiwan -economy in a recession after Q4 contraction q/o/q

7) Greek- debt discussions for another week are hours away from wrapping up, becoming a nightmare

8 ) Eurozone -Amount of LTRO funds from ECB continue to be redeposited with the ECB

 

Upcoming Sovereign Bond Sales Dates

Feb 07  09:00  Netherlands Eur 5.0bn Jul 2022 DSL

Feb 07  10:10  Greece  6M T-bill auction

Feb 07  10.30  UK  Auctions 1.75% 2017 conventional Gilt

Feb 07  15:30  UK  Details gilt auction on Feb 16

Feb 07  18:00  US  Auctions 3Y Notes

Feb 08  10:10  Sweden  Nominal bond auction

Feb 08  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Feb 08  10:30  Swiss  Bond auction

Feb 08  16:30  Italy   Details BOT auction on Feb 13

Feb 08  18:00  US  Auctions 10Y Notes

Feb 09  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 09  15:30  Sweden  Details I/L bond auction on Mar 23

Feb 09  16:00  US  Announces auctions of 30Y TIPS on Feb 16

Feb 09  16:30  Italy   Details BTP/CCTeu auction on Feb 14

Feb 09  18:00  Italy   Auctions 30Y Bonds

Feb 10  11:00  Belgium  OLO auction

USD/JPY Forecast February 6, 2012, Technical Analysis

The USD/JPY pair rose for the Friday session as the Non-Farm Payroll numbers came out better than expected. The pair is being lifted by the Bank of Japan, and at the levels that we started the day were the start of serious support from them. The bank has intervened several times recently, so selling down there was never going to be an option.

The rise up to the 76.50 level is worth noting as it was the former support that gave way a few sessions ago. Classic technical analysis says that the support should now be resistance, and at this point it still is. However, selling form this level is reckless. Because of this, we are willing to buy, but only on a fall to lower levels. We cannot sell at all currently.

USD/JPY Forecast February 6, 2012, Technical Analysis
USD/JPY Forecast February 6, 2012, Technical Analysis

USD/JPY Forecast for the Week of February 6, 2012, Technical Analysis

The USD/JPY pair fell during most of the week, but the Friday session saw a sharp rise in the value of this market. The Non-Farm Payroll numbers came out strongly, and this pushed the pair up. The Bank of Japan is sitting just below, and as a result – we simply cannot sell this market. The buying of it is difficult as well, because the range that we are in is so tight. This is a shorter-term market at this point, and we are waiting to see if the 80 level gives way in order to buy and hold. Until then, it is difficult to be involved for more than short-term trades.

USD/JPY Forecast for the Week of February 6, 2012, Technical Analysis
USD/JPY Forecast for the Week of February 6, 2012, Technical Analysis

In The Eyes of the Experts – 3/2/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • GBP
  • CHF
  • NZD

 

Currencies watch for Short:

  • USD
  • JPY

 

Today’s important times (GMT+2):

  • 14:00 CAD
  • 15:30, 17:00 USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.3027    1.3081    1.3138    1.3192    1.3249   
GBPUSD 1.5745 1.5777 1.5818 1.5841 1.5882
USDJPY 75.95 76.06 76.14 76.25 76.34
USDCHF 0.9092 0.9133 0.9170 0.9210 0.9247
USDCAD 0.9948 0.9971 0.9990 1.0013 1.0032
AUDUSD 1.0634 1.0667 1.0711 1.0745 1.0788

The World Waits On The All Important US Jobs Reports

It seems that global markets today are hinged on the US Jobs report.

This week, we have seen mixed data out of the US, but overall the news has been positive.

Yesterday, Fed Reserve Chairman Bernanke, addessed congress and although his remarks showed concern, he admitted that the US economy was slowly recovering. Promising that the Fed’s were watching closely and would do whatever it takes to keep the recovery moving along.

Overall, manufactuing and durable goods reports have been positive, and the US backbone is our manufacturing sector, so as long as factories are starting to improve, so will the overall economy eventually.

The largest lag has been in the creation of new jobs, which effects consumers, confidence, taxes, and growth.

This week we have had mixed signals.

The Challenger Jobs report figures showed job losses in January totaled 53,486 in January, the highest total since last September and nearly 39% higher than job cuts of 38,519 in January 2011. Compared with December 2011 job cuts of 41,785, the January losses are 28% higher.

Government job losses totaled just 3,021, but the monthly average for 2011 was 15,255 job cuts. In the past 24 months, 325,319 jobs have been lost in the public sector

the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending January 28 fell by 12,000 to a seasonally adjusted 367,000, beating expectations for a decline to 373,000. The previous week’s figure was revised up to 379,000 from 377,000.

Jobless claims have remained below 400,000, a level historically associated with an improving labor market, in 12 of the past 14 weeks.

The global markets are holding their breath, in hopes of good numbers today from the US all important job reports.

The hope is that if America begins the recovery it can be the locomotive to pull up Europe and provide the far east increase demand for exports.

Shorlty the US will be releasing the reports.  In the hopes that reports meet forecast or exceepd.

The Labor Department  will release four all important reports.

  • Average Hourly Earnings measures the change in the price businesses pay for labor, not including the agricultural sector.
  • Nonfarm Payrolls measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity.
  • The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. 
  • Private Nonfarm Payrolls measures the change in the number of total number of paid U.S. workers of any business, excluding general government employees, private household employees, employees of nonprofit organizations that provide assistance to individuals and farm employees.

  

There will be immediate market reaction and currency movements. If the reports are positive the greenback should soar, along with EU and US markets. Crude oil should move up and Gold will possibily fall.

Everyone is sitting with baited breath at this moment… Counting down the minutes.

China Up – Japan Down

Hong Kong shares ended in positive territory on Friday, reversing earlier losses, ahead of the release of US jobs figures later in the day. 

The benchmark Hang Seng Index nudged up 17.53 points to 20,756.98 on turnover of HK$63.44 billion ($8.31 billion). 

Regional dealers had their eyes on the release later Friday of a January US payrolls report, while they also digested a batch of earnings releases that highlighted tough global conditions. 

Chinese shares closed up 0.77 per cent, also shaking off earlier losses, on hopes for strong corporate earnings, dealers said. 

The Shanghai Composite Index, which covers both A and B shares, ended up 17.85 points at 2,330.41 on turnover of 70.2 billion yuan ($11.1 billion). 

But analysts said profit takers may move in next week as they wait further monetary easing. 

“The financial sector, a major driver behind gains over the past two days, may need to take a breather after recent gains,” Jacky Zhang, an analyst at Capital Securities, told Dow Jones Newswires. 

The driving factors today were strong economic data from the US.

The US unemployment figure fell more than forecast meaningless people were recently laid off or lost jobs. This is a positive sign for the US recovery.

Also manufacturing data was strong giving an additional boost.

Federal Reserve Chairman Ben Bernanke tempered confidence by telling Congress he was still concerned about persistently high unemployment, and especially those who have been jobless for long periods, which could make them more unlikely to find work.  Also Federal Reserve member Fisher gave a statement yesterday, emphasizing that the statements of FOMC on long term interest rates, was only a projection with no data to substantiate and that the Fed would do what was necessary at the time and that no one could predict the economy in 2014.

Japan’s Nikkei Stock Average fell 0.5% to 8,831.93, Australia’s S&P/ASX 200 index shed 0.4% to 4,251.20 and South Korea’s Kospi gave up 0.6% to 1,972.34.

Japanese and South Korean shares lost ground Friday, as investors digested a raft of earnings reports and turned cautious ahead of a key U.S. employment report. The never ending Greek scenario still lingers on with contradictory statements but officials yesterday, the markets and investors are totally confused and are waiting for a special meeting of the EU on Monday.

USD/JPY Forecast February 3, 2012, Technical Analysis

 

USD/JPY fell again on Thursday as traders prepare for the Non-Farm Payroll number today. The market almost always will react in violent moves to this announcement, and this pair is no different. The levels we are approaching though – they suggest only one way to trade.

The pair is to be bought only, as the Bank of Japan is sitting just below where we are at the moment, and intervention is certainly something they aren’t afraid of doing. The strong Yen has been making it tough on the Japanese economy for some time now, and with the rest of the world showing signs of slowing down, those Japanese products that the country depends on exporting certainly cannot be overly expensive. With this in mind, the central bank and major exporters are all trying to fight Yen strength.

The recent action has been a sudden drop, followed by several supportive hammers in a row. This suggests that either we are approaching strong order sizes, or the market is leery of the area we are in. (They should be.) The central bank is also starting to talk about intervention as well, and this normally starts just about a week or two before action.

The Non-Farm Payroll number will move the market, but we certainly cannot sell now. The pair could be bought on a dip, and any negative knee-jerk reaction is almost an invitation to go long and watch the Bank of Japan intervene. It should be noted though, that the BoJ typically does these interventions on Monday morning in Asia, when the markets are very quiet. If there is a bad reaction to the NFP today, the central bank may not get involved until then.

We would also be interested in buying if the market can break above the 76.50 level again, and prove it as supportive. However, this probably wouldn’t be accomplished in a single session, so this buy trigger wouldn’t be obvious until sometime next week. The pair could pop back up to the 78 area, and this is our target as soon as we get some kind of buy signal – or sell off to fade.

USD/JPY Forecast February 3, 2012, Technical Analysis
USD/JPY Forecast February 3, 2012, Technical Analysis

USD/JPY Fundamental Analysis February 6, 2012, Forecast

Economic Events: (GMT)

00:30     AUD       Retail Sales (MoM)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. 

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD                                                                             

 19:00    USD       Federal Budget Balance                 

The Federal Budget Balance measures the difference in value between the federal government’s income and expenditure during the reported month. A positive number indicates a budget surplus, a negative number indicates a deficit. 

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.                                                                            

 21:45    NZD       Employment Change (QoQ)                                       0.2%

Employment Change measures the change in the number of people employed. Job creation is an important indicator of consumer spending.

A higher than expected reading should be taken as positive/bullish for the NZD, while a lower than expected reading should be taken as negative/bearish for the NZD.                          

21:45     NZD       Labor Cost Index (QoQ)                                                                                                              

 21:45    NZD      Unemployment Rate                                                     6.6%

The Labor Cost Index measures the change in the price businesses pay for labor, excluding overtime. It is a leading indicator of consumer inflation.

The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous quarter.

A higher than expected reading should be taken as negative/bearish for the NZD, while a lower than expected reading should be taken as positive/bullish for the NZD.

Analysis and Recommendation: ( close of Asian session )

USD/JPY was trading at 76.20 holding close to its opening and in a tight narrow range.

Japanese Finance Minister Azumi raised fresh warnings over the strength of the yen, saying low U.S. interest rates were a factor in an acceleration in speculative yen buying, according to reports. Azumi told reporters in Tokyo that the rise in the currency appeared “one-sided” and said “decisive steps” could be taken to halt the movement, adding he had “strong concerns” the rally had lost touch with economic reality in Japan. “I will closely watch market movement and take appropriate action. There is no change in my stance. If there is one-sided movement, I will take decisive steps,” Azumi said. The U.S. dollar rose slightly to ¥76.18 around midday in Tokyo, but the U.S. dollar remained near its post-World-War-II low of ¥75.31, hit on Oct. 31.

Economic Data results prior trading day ( key  better than expected worse than expected at forecast )      

NZD       ANZ Commodity Price Index (MoM)             1.2%                                                     -0.8%                    

AUD       Building Approvals (MoM)                              -1.0%                    2.1%                      10.1%                   

AUD       Trade Balance   1.71B                                    1.20B                    1.34B                    

CHF        Trade Balance   2.07B                                   2.85B                     2.95B                    

GBP       Construction PMI                                             51.4                         52.9                        53.2                       

 EUR       PPI (MoM)                                                         -0.2%                     -0.1%                     0.2%                     

 USD      Challenger Job Cuts (YoY)                           38.9%                                                   30.6%                   

 USD      Nonfarm Productivity (QoQ)                          0.7%                      1.0%                      1.9%                     

USD       Initial Jobless Claims    367K                       373K                      379K                     

USD       Unit Labor Costs (QoQ)                                  1.2%                     0.9%                      -2.1%                    

 USD      Continuing Jobless Claims                           3437K                   3565K                    3567K  

Scheduled Sovereign Bond Sales

Feb 06  10:10  Norway  Bond auction

Feb 07  09:00  Netherlands Eur 5.0bn Jul 2022 DSL

Feb 07  10:10  Greece  6M T-bill auction

Feb 07  10.30  UK  Auctions 1.75% 2017 conventional Gilt

Feb 07  15:30  UK  Details gilt auction on Feb 16

Feb 07  18:00  US  Auctions 3Y Notes

Feb 08  10:10  Sweden  Nominal bond auction

Feb 08  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Feb 08  10:30  Swiss  Bond auction

Feb 08  16:30  Italy   Details BOT auction on Feb 13

Feb 08  18:00  US  Auctions 10Y Notes

Feb 09  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 09  15:30  Sweden  Details I/L bond auction on Mar 23

Feb 09  16:00  US  Announces auctions of 30Y TIPS on Feb 16

Feb 09  16:30  Italy   Details BTP/CCTeu auction on Feb 14

Feb 09  18:00  Italy   Auctions 30Y Bonds

Feb 10  11:00  Belgium  OLO auction

Federal Reserve Chairman Ben Bernanke Testifies Before Congress

Federal Reserve Chairman Ben Bernanke testified before congress today. His remarks were short and to the point. He basically reiterated the FOMC statements of last week, maintaining a cautious tone on the U.S. outlook that interest rates are likely to remain near zero until at least through late 2014.

He also noted that the US economy was still fragile and in a slow recovery and was not necessarily protected from Europe and that it was too soon to tell if the US would escape unscathed from the EU crisis.

Bernanke also noted that the Fed was in daily contact with their counterparts throughout the world monitoring the Europe and Global Crisis closely…

His testimony was as expected. The only notable change came in his brief statements after. The Chairman noted the central bank was considering additional monetary easing, but he offered no fresh hints of such plans in his testimony.

In late 2008, the Fed bought $2.3 trillion in bonds in a further effort to spur the economy. Many economists expect it will further expand its portfolio in the months ahead with another round of purchases.

His testimony also included comments regarding uncertain job prospects, along with tight mortgage credit conditions, continue to hold back the demand for housing. Although low interest rates on conventional mortgages and the drop in home prices in recent years have greatly improved the affordability of housing, both residential sales and construction remain depressed. A persistent excess supply of vacant homes, largely stemming from foreclosures, is keeping downward pressure on prices and limiting the demand for new construction.

The Fed outlook continued “More recently, the pace of growth in business investment has slowed likely reflecting concerns about both the domestic outlook and developments in Europe. However, there are signs that these concerns are abating somewhat. If business confidence continues to improve, U.S. firms should be well positioned to increase both capital spending and hiring: Larger businesses are still able to obtain credit at historically low interest rates, and corporate balance sheets are strong. And, though many smaller businesses continue to face difficulties in obtaining credit, surveys indicate that credit conditions have begun to improve modestly for those firms as well.”

Overall, Bernanke continued on the same note as the FOMC, reassuring that the US was in slow recovery and that the future would show improvement, but there could be bumps in the road, and the Fed was prepared to deal with any forthcoming problems. In all his statement and testimony had a positive outlook.

In The Eyes of the Experts – 2/2/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • JPY
  • GBP

 

Currencies watch for Short:

  • EUR
  • CHF

 

Today’s important times (GMT+2):

  • 15:30 ,17:00: USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.2944    1.3056    1.3137    1.3249    1.3329   
GBPUSD 1.5634 1.5739 1.5810 1.5915 1.5986
USDJPY 75.85 76.02 76.18 76.34 76.50
USDCHF 0.9003 0.9088 0.9168 0.9223 0.9304
USDCAD 0.9910 0.9942 0.9995 0.0027 1.0075
AUDUSD 1.0502 1.0608 1.0674 1.0780 1.0845

USD/JPY Forecast February 2, 2012, Technical Analysis

USD/JPY fell again on Wednesday as traders continue to press their luck against the Bank of Japan and its desire to keep this cross rate higher. The resulting bounce in the late hours of the session saw a hammer form, and this area that the pair currently sits in is the start of serious support – not the least of which includes a massive intervention candle.

Because of this, we simply cannot sell at this point in time. However, a small position can be initiated in the desire to catch intervention attempts. A break of the high from the Wednesday session could be your trigger. However, it should be said that patience will more than likely be needed as the BoJ will move on its own time.

USD/JPY Forecast February 2, 2012, Technical Analysis
USD/JPY Forecast February 2, 2012, Technical Analysis

USD/JPY Fundamental Analysis Feb. 3 , 2012, Forecast

Economic Events: (GMT)

No Local Economic Events Scheduled for Friday

00:15     USD       FOMC Member Fisher Speaks

Federal Reserve Bank of Dallas President and Federal Open Market Committee (FOMC) voting member (2008 and 2011) Richard Fisher is to speak. FOMC members are responsible for setting the benchmark interest rate and their speeches are closely watched for indications on the future possible direction of monetary policy.

His comments may determine a short-term positive or negative trend                                                                                                 

 13:30    USD      Average Hourly Earnings (MoM)                              0.2%                      0.2%                     

 13:30    USD      Nonfarm Payrolls                                                         150K                      200K                     

 13:30    USD       Unemployment Rate                                                   8.5%                      8.5%                     

13:30     USD       Private Nonfarm Payrolls                                          170K                      212K

 Employment Reports

Average Hourly Earnings measures the change in the price businesses pay for labor, not including the agricultural sector.

Nonfarm Payrolls measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity.

The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. 

Private Nonfarm Payrolls measures the change in the number of total number of paid U.S. workers of any business, excluding general government employees, private household employees, employees of nonprofit organizations that provide assistance to individuals and farm employees.

               

 15:00    USD       ISM Non-Manufacturing Index                                 53.2                        52.6

The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) (also known as the ISM Services PMI ) rates the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. The data is compiled from a survey of approximately 400 purchasing managers in the non-manufacturing sector. On the index, a level above 50 indicates expansion; below indicates contraction.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

Analysis and Recommendation: ( close of Asian session )

USD/JPY was trading  at 76.17 down from 76.22. The yen continues to drop to Post World War II lows, as the possibilities for BoJ intervention become more likely.

The greenback dropped against the major currencies in Asian trading after a wave of healthy manufacturing figures popped up in the U.S., Europe and in China, prompting investors to short the greenback and embark in search of better returns in stocks and other currencies. 

Market movers on Thursday are:

The U.S. official unemployment data due on Friday, although on Thursday, markets will pay attention to initial jobless claims as well as preliminary data on nonfarm productivity and unit labor costs to combine these with the ADP reports to verify Friday’s release

Also on Thursday, Fed Chairman Bernanke is set to testify on the economic outlook before the House budget committee. Comments are expected on the FOMC interest rate policy of last week.

Economic Data from Europe and the USA on Wednesday:

GBP       Nationwide HPI (MoM)                      -0.2%                    -0.1%                     -0.2%      Unexpected Drop           

CHF        Retail Sales (YoY)                            0.6%                     1.6%                      1.8%       Unexpected Drop           

CHF        SVME PMI                                          47.3                       51.8                        49.1        Unexpected Drop

EUR        French Manufacturing PMI               48.5                       48.5                        48.5                                       

EUR        German Manufacturing PMI           51.0                       50.9                        50.9         Above Forecast              

 EUR       Manufacturing PMI                           48.8                       48.7                        48.7         Above Forecast              

 GBP      Manufacturing PMI                           52.1                       50.1                        49.7        Above Forecast               

 EUR       CPI (YoY)                                            2.7%                     2.7%                        2.7%

USD       ADP Employment Change             170K                      189K                     292K      Unexpected Drop

USD       ISM Manufacturing PMI                   54.1                        54.6                        53.9        Above Forecast

USD       Crude Oil Inventories                      4.2M                      3.2M                      3.6M      Increased Inventory

 

 

 

Scheduled Sovereign Bond Sales

Feb 06  10:10  Norway  Bond auction

Feb 07  09:00  Netherlands Eur 5.0bn Jul 2022 DSL

Feb 07  10:10  Greece  6M T-bill auction

Feb 07  10.30  UK  Auctions 1.75% 2017 conventional Gilt

Feb 07  15:30  UK  Details gilt auction on Feb 16

Feb 07  18:00  US  Auctions 3Y Notes

Feb 08  10:10  Sweden  Nominal bond auction

Feb 08  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Feb 08  10:30  Swiss  Bond auction

Feb 08  16:30  Italy   Details BOT auction on Feb 13

Feb 08  18:00  US  Auctions 10Y Notes

Feb 09  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 09  15:30  Sweden  Details I/L bond auction on Mar 23

Feb 09  16:00  US  Announces auctions of 30Y TIPS on Feb 16

Feb 09  16:30  Italy   Details BTP/CCTeu auction on Feb 14

Feb 09  18:00  Italy   Auctions 30Y Bonds

Feb 10  11:00  Belgium  OLO auction 

In The Eyes of the Experts – 1/2/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • AUD
  • NZD
  • EUR

 

Currencies watch for Short:

  • USD
  • JPY
  • EUR

 

Today’s important times (GMT+2):

  • 15:15 ,17:00: USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.2937    1.3006    1.3109    1.3178    1.3281   
GBPUSD 1.5654 1.5706 1.5751 1.5802 1.5847
USDJPY 76.01 76.13 76.27 76.39 76.53
USDCHF 0.9078 0.9140 0.9183 0.9246 0.9289
USDCAD 0.9927 0.9979 1.0016 1.0068 1.0105
AUDUSD 1.0514 1.0559 1.0621 1.0666 1.0728