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.

AUD/USD 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 )

AUD/USD was trading at 1.0695 The Aussie was lower against the U.S. Dollar on Friday.

The USD continued to hold strenght on the US employment data and on Fed Reserve Fisher, who indicated that the low interest rates set last week by the Fed most likely will not hold until 2014, that is had no basis to project interest rates that far out.

Australia trade balance came in above forecast, giving the markets some positive data. Along with Prime Ministers Gillard, tax reforms and statements of earlier in the week.

The Greek crisis or saga… continues on, its like a famous greek tradegy.. does Homer come to mind… it just never seems to end.

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%                    

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

AUD/USD Forecast February 3, 2012, Technical Analysis

 

AUD/USD rose initially during the Thursday session, but fell in the later hours to form a shooting star. The shooting star is at the previous highs, so while it isn’t a large one – it does carry some weight. The Non-Farm Payroll report later today will be the catalyst to move this pair going forward in the near-term, and the candle will be treated like a doji by us.

The signals are simple: If the market breaks above the highs of the Thursday range, we will buy. If it breaks below the lows of the Thursday range, we won’t sell; we will look for support in the 1.05 to 1.04 area. Selling isn’t a thought until we get a daily close below the 1.04 level.

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

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

AUD/USD Forecast February 2, 2012, Technical Analysis

AUD/USD continued to rise in value on Wednesday as traders pile into the commodity currencies as a whole. The Aussie is also enjoying the benefits of being highly correlated to gold as well, and as that market looks so healthy, the trend should continue.

However, it would be remiss of us not to mention the fact that a new high wasn’t made yet. The 1.0750-ish top that was made back in October still stands, and at this lofty area, it is difficult to go long unless that area is broken to the upside. The market should have support all the way down to the 1.04 level, so we are comfortable buying pullbacks at this point as well, as long as signs of support reemerge. 

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

AUD/USD 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 )

AUD/USD was trading at 1.0712. The Aussie on solid economic strenght in Australia and comments by Prime Minister Gillard saying that the Australian dollar will remain relatively strong for years to come, driven by its new found “safe haven” status and as investors use it as a proxy currency for the Asian region.

The Prime Minster stated that the European crisis was of a different nature – one stemming from concern about sovereign risk and the need for eurozone governments to undertake “long-term fiscal repair”.

As the USD lost strength, on economic data yesterday, investors sold greenbacks and looked for other safe haven currencies. The so-called risk currencies like Aussie and kiwi can be very well-supported. The duo hit 1.0756 in Asian trading up 0.27% and up from a session low of 1.0703  and off from a high of 1.0756.

Australia’s trade surplus rose to  1.7 billion Australian dollars ($1.8 billion) in December, from A$1.3 billion in November. Forecasts had projected a trade surplus of A$1.2 billion in the month. Exports rose 2% to A$27.8 billion, while imports rose 1% to A$26.1 billion, the Australian Bureau of Statistics reported Thursday. The ABS also said that seasonally-adjusted housing approvals fell 1% in December, compared to a 10.1% rise in November. Economists had expected a 4% rise in dwelling approvals.  ( see below for other economic report data )

 

 

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

Building A New Australia in Gillard Fashion

Delivering the keynote speech today at the Australian-Israel Chamber of Commerce in Melbourne, Australia, Prime Minister Julia Gillard expects the Australian dollar will remain relatively strong for years to come, driven by its new found “safe haven” status and as investors use it as a proxy currency for the Asian region.

The Prime Minster stated that the European crisis was of a different nature – one stemming from concern about sovereign risk and the need for eurozone governments to undertake “long-term fiscal repair”.

“If anything of value can be retrieved from the wreck of failed economic approaches in Europe … it is the lesson to the world: fiscal discipline matters,” she said.

“My firm conclusion is that handing down a budget surplus in May is the right call in the present economic circumstances.

“Our fiscal policy must be disciplined and must be seen to be disciplined as well. It’s in our interest to keep ourselves well ahead of the pack.”

She concluded today another driver for the currency had been investors using it as a substitute for betting directly on growth in the region, especially in China.

This was Australia’s reward of the Government’s fiscal discipline, she said.

“Add the relative woes of European economies – touching even traditional currency strongholds like Switzerland – and for the first time in history Australia is being referred to as something of a global ‘safe haven’,” she said.

“What is certain from all this is our dollar is likely to remain relatively high for years to come.”

“There will be more ups and downs in global markets for as long as it takes for Europe to get its house in order.”

This resounds of a stern lecture, to the EU leadership, who seems to be having a problem doing just that.

The Australian Dollar climbed reaching 1.0632

St George Bank economist Janu Chan said that optimistic news from the eurozone had encouraged trading in the Australian currency.

The Greek Prime Minister (Lucas) Papademos said there had been progress in the talks, and they were coming closer to reaching an agreement. That said, there’s a pretty good risk appetite in Australia generally, given our generally strong fundamentals.

There are fundamental issues that we remain concerned about – particularly Greece’s ability to stimulate growth, given their austerity measures.

Today, the Australian Prime Minister will promise tax cuts to business which the Opposition yesterday said were too expensive to implement.

The Prime Minister will also tell families a Labor Government will create a new range of jobs, and keep taxes down.

Ms Gillard will use a speech resembling an election campaign opener to stake out economic management as her preferred battleground with Opposition Leader Tony Abbott.

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

AUD/USD Forecast February 1, 2012, Technical Analysis

AUD/USD climbed again on Tuesday, but gave much of the gains back. As a matter of fact, the pair ended the day by forming a shooting star. However, there is a fairly significant hammer on Monday supporting the pair, and it looks like more of a consolidation play than anything else at this point.

We don’t see this market as a possible sell until we close on a daily chart sub-1.04. Until then, we like buying the Aussie on pullbacks, and do continue to expect the pair to follow the technical analysis that pointed out the triangle being broken to the upside. That triangle said we were going to 1.12 before it was all over with. Until we reenter that area, (hence the sub-1.04) we have to assume that is where we are going. 

AUD/USD Forecast February 1, 2012, Technical Analysis
AUD/USD Forecast February 1, 2012, Technical Analysis

AUD/USD Fundamental Analysis Feb. 2, 2012 Forecast

Economic Events: (GMT)

00:30     AUD       Building Approvals (MoM)                                           2.1%                      8.4%

Building Approvals (also known as Building Permits) measures the change in the number of new building approvals issued by the government. Building permits are key indicator of demand in the housing market. 

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.                          

 00:30    AUD       Trade Balance                                                                 1.20B                     1.38B

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

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.                           

 13:30    USD       Nonfarm Productivity (QoQ)                                       1.0%                      2.3%     

Nonfarm Productivity measures the annualized change in labor efficiency when producing goods and services, excluding the farming industry. Productivity and labor-related inflation are directly linked-a drop in a worker’s productivity is equivalent to a rise in their wage.

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.           

 13:30    USD       Initial Jobless Claims                                                   373K                      377K

 13:30    USD      Unit Labor Costs (QoQ)                                                0.9%                      -2.5%                    

 13:30    USD      Continuing Jobless Claims                                          3565K                    3554K     

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week. Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.       

Unit Labor Costs measure the annualized change in the price businesses pay for labor, excluding the farming industry. It is a leading indicator of consumer inflation.

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.

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.                                                      

Analysis and Recommendation:  ( closed of asian session )

AUD/USD was trading at 1.0609

The AUD fell today, on reports  shoing weaken Australian housing market on fears the economy may be cooling. The Australian Bureau of Statistics reported that the House Price Index, which measures home values in the country’s eight state capitals, fell by 1.00% in the fourth quarter of 2011, well below market expectations for a -0.60% figure.

While the AUD continues to be the currency of choice for investors given the yield return, the AUD may see some profit taking heading into next week’s RBA meeting.

The AUD/USD has rallied 9 cents over the past month so importers might consider taking advantage of the move for at least of a portion of outstanding exposures. With central banks around the world reducing or keeping interest rates at very low levels to try and spur growth, locally the RBA do have room to cut and a 25bp rate cut at next week’s RBA meeting is currently priced in by the market.

Reports in the US showed that manufacturing activity in the Chicago area declined unexpectedly in January. The Chicago PMI declined to a seasonally adjusted 60.2, from a reading of 62.5 in December. Although this report only covers a small area of the US it is thought to be a key view of US manufacturing. Markets had forecast the PMI to rise to 63.0 in January.

In Europe economic data was weak and disappointing, most reports met weak forecasts or fell below expectations, except for the bright spot an unexpected improvement in German Unemployment, dropping by 4000.

German Unemployment Change -34K; better than expected.

SNB currency reserves at CHF 257.5 bln for the end of December.

French Consumer Spending (Dec) -0.7%; worse than expected.

French Producer Prices (Dec) -0.1%, as expected.

Barclays raises their 6 month AUD/USD forecast from 1.0100 to 1.0500.

Swiss UBS consumption indicator (Dec) 0.92 vs 0.81 prior reading.

 

Scheduled Sovereign Bond Sales

Feb 01  15:30  Sweden  Details nominal bond auction on Feb 08

Feb 01  16:00  US

Announces details of 3Y Notes on Feb 07, 10Y Notes on Feb

08 & 30Y Bonds on Feb 09

Feb 02  09:50  France  OAT Auction

Feb 02  10.30  UK  Auctions 0.125% 2029

In The Eyes of the Experts – 31/1/2012

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

 

Currencies watch for Short:

  • USD
  • JPY
  • CHF

 

Today’s important times (GMT+2):

  • 15:30 CAD
  • 17:00 USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.3007    1.3072    1.3141    1.3206    1.3247   
GBPUSD 1.5621 1.5663 1.5693 1.5735 1.5765
USDJPY 75.88 76.12 76.44 76.68 77.04
USDCHF 0.9092 0.9133 0.9170 0.9211 0.9249
USDCAD 0.9974 0.9998 1.003 1.0057 1.0092
AUDUSD 1.0471 1.0528 1.0582 1.0639 1.0692

AUD/USD Forecast January 31, 2012, Technical Analysis

AUD/USD fell during the session on Monday as the markets were initially weak in Asia and Europe. The Aussie is always receptive to the “risk appetite” globally, and as a result will often fall in these situations. However, the stock markets picked back up once it was just the Americans involved, and this helped to boost the demand for the Aussie dollar.

The recent breakout of the 1.04 level still means quite a bit to us. The triangle that was formed below measured a move all the way to 1.12, and with the Federal Reserve choosing to extend the low interest rates until the end of 2014 there is a real chance that commodities will continue to strengthen as the Dollar weakens. The Australians will continue to enjoy strong demand for their currency as long as the trends in interest rates continue. Adding to this is the fact that the pair also has a positive swap.

The 1.05 level acted as support during the session, and the hammer shaped candle suggests that buyers stepped in to push the pair higher late in the session. The 1.07 level act as resistance, and we could see the pair struggle to climb above it, but this should only be a bit of a minor hiccup on the way to higher levels.

Because of this, we are only buying this pair, and as long as gold looks healthy, we are even more interested in the Aussie. The bottom of this hammer being broken would be a sign of real weakness, but the 1.04 level is the more important level. As long as this market can stay above it, the pair will be hard to sell. In fact, we think that perhaps taking a “core” position that you can trade around on the way up might be the way to go.

We are buying pullbacks that show supportive price action until we break below the 1.04 level. We also are buying a daily close above the 1.07 level as we think this pair should be healthy most of 2012.

AUD/USD Forecast January 31, 2012, Technical Analysis
AUD/USD Forecast January 31, 2012, Technical Analysis

AUD/USD Fundamental Analysis Feb 1, 2012 Forecast

Economic Events: (GMT)

Close of Asian Markets

00:00     AUD       HIA New Home Sales (MoM)     6.8%

Housing Industry Association (HIA) New Home Sales measures the change in the number of newly constructed homes sold.

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.                          

00:30     AUD       House Price Index (QoQ)     -0.60%                 -1.20%

 The Australian House Price Index (HPI) measures the change in the selling price of homes in the nation’s eight state capitals. It is a leading indicator of health in the housing sector.

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.           

13:15     USD       ADP Nonfarm Employment Change     190K                      325K

The ADP National Employment Report is a measure of the monthly change in non-farm, private employment, based on the payroll data of approximately 400,000 U.S. business clients. The release, two days ahead of government data, is a good predictor of the government’s non-farm payroll report. The change in this indicator can be very volatile.

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.                          

 15:00    USD       ISM Manufacturing Index     54.5                        53.9

The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (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 manufacturing industry. 
On the index, a level above 50.0 indicates industry 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.                           

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       Unemployment Rate     6.6%

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:

AUD/USD was trading at 1.0632 up from the opening of 1.0599.

The USD fell against  most major currencies this morning as Australian and New Zealand dollars attracted investors who by mid-session trading determined that the EU Summit had reached a successful conclusion, even without the resolution of Greece. The commitment of the 26 nations is strong and they are determined to work their way out of the debt crisis. US economic data has been weak in the past few days, not supporting Monday’s surge in the USD.

 

Scheduled Sovereign Bond Sales

Feb 01  10:10  Sweden  Auctions T-bills

Feb 01  10:30  Germany  Eur 5.0bn 2.0% Jan 2022 Bund

Feb 01  10:30  Portugal  Eur 0.75-1.0bn 3M T-bill

Feb 01  10.30  UK  Auctions 5.0% 2025 conventional Gilt

Feb 01  15:30  Sweden  Details nominal bond auction on Feb 08

Feb 01  16:00  US

Announces details of 3Y Notes on Feb 07, 10Y Notes on Feb

08 & 30Y Bonds on Feb 09

Feb 02  09:50  France  OAT Auction

Feb 02  10.30  UK  Auctions 0.125% 2029

In The Eyes of the Experts – 30/1/2012

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
  • USD

 

Currencies watch for Short:

  • EUR
  • NZD
  • AUD

 

Today’s important times (GMT+2):

  • 23:45 –NZD

 

Important rates: 

Pair R2 R1 Pivot S1 S2
EURUSD    1.3026    1.3118    1.3166    1.3260    1.3310   
GBPUSD 1.5606 1.5670 1.5704 1.5769 1.5802
USDJPY 76.11 76.39 76.92 77.220 77.73
USDCHF 0.9051 0.9088 0.9158 0.9195 0.9264
USDCAD 0.9958 0.9982 1.0011 1.0036 1.0065
AUDUSD 1.0561 1.0608 1.0638 1.0686 1.0716

AUD/USD Fundamental Analysis Jan. 31, 2012 Forecast

Economic Events: (GMT)

Close of Asian Markets

00:30     AUD       NAB Business Confidence     2

The National Australia Bank (NAB) Business Confidence Index rates the current level of business conditions in Australia. Changes in business sentiment can be an early signal of future economic activity such as spending, hiring, and investment. The index is based on data collected from a survey of around 350 companies. A level above zero indicates improving conditions; below indicates worsening 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.                           

13:30     USD      Employment Cost Index (QoQ)     0.4%                      0.3%

The Employment Cost Index measures the change in the price businesses and the government pay for civilian labor. 

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.                          

 14:45    USD       Chicago PMI     63.0                        62.5                       

 15:00    USD       CB Consumer Confidence     68.2                        64.5

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

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:

AUD/USD was trading at 1.0596

The USD was up against its partners in Canada, Australia and New Zealand, with USD/CAD up 0.18% at 1.0035, AUD/USD down 0.62% at 1.0596 and NZD/USD down 0.52% at 0.8204.

The dollar index on Monday regained a bit of ground lost the previous week, although some analysts warned of possible risks ahead for the USD. Trading at 0.27% at 79.16

The dollar index fell 1.7% last week after the FOMC said that it could keep interest rates at low levels until late 2014. The Fed had previously said that rates would stay low until the middle of 2013.

 Asian sentiment were concerns about Europe ahead of a leaders’ summit in Brussels later Monday, as questions surrounded Greek finances.

European concerns, a lack of easing measures over the holiday, and comments by Chinese Premier Wen Jiabao vowing to tackle irregularities surrounding local-government debt all helped send banks lower in Hong Kong and weakened Asian currencies.

This is a big week for U.S. data releases, and in turn, the U.S. dollar. Heavyweight data including January payrolls, ISM manufacturing confidence and consumer confidence readings are on tap over coming days.

Scheduled Sovereign Bond Sales

Jan 30  10:10  Italy   BTP/CCTeu auction

Jan 30  10:10  Norway  Nok 4.0bn 5.0% May 2015 bond

Jan 30  11:00  Belgium  OLO Auction

Jan 30  12:00  Norway  Details bond auction on Feb 06

Jan 31  10:30  Belgium  Auctions 3 & 6M T-bills

Jan 31  15:30  UK  Details gilt auction on Feb 07

Feb 01  10:10  Sweden  Auctions T-bills

Feb 01  10:30  Germany  Eur 5.0bn 2.0% Jan 2022 Bund

Feb 01  10:30  Portugal  Eur 0.75-1.0bn 3M T-bill

Feb 01  10.30  UK  Auctions 5.0% 2025 conventional Gilt

Feb 01  15:30  Sweden  Details nominal bond auction on Feb 08

Feb 01  16:00  US

Announces details of 3Y Notes on Feb 07, 10Y Notes on Feb

08 & 30Y Bonds on Feb 09

Feb 02  09:50  France  OAT Auction

Feb 02  10.30  UK  Auctions 0.125% 2029

AUD/USD Weekly Fundamental Analysis Jan. 30-Feb. 3, 2012, Forecast

Economic Events: (GMT)

Please review the daily forecast for explainations and expected results

AUD-NZD Calendar

Jan. 30  21:45     NZD       Building Consents (MoM)     8.0%                      -6.4%                    

Jan. 31  00:30     AUD       NAB Business Confidence     2                             

Feb. 01 00:00     AUD      HIA New Home Sales (MoM)     6.8%                     

                00:30     AUD       House Price Index (QoQ)     -0.60%                 -1.20%                

                21:45     NZD      Employment Change (QoQ)     0.2%                     

                21:45     NZD       Unemployment Rate     6.6%                     

Feb. 02 00:30     AUD       Building Approvals (MoM)     2.1%                      8.4%                     

                00:30     AUD      Trade Balance     1.20B                     1.38B

USD Calendar

Jan. 30  13:30     USD       Core PCE Price Index (MoM)     0.1%                      0.1%                     

                13:30     USD      Personal Spending (MoM)     0.2%                      0.1%                     

                13:30     USD      Employment Cost Index (QoQ)     0.4%                      0.3%                     

                14:45     USD       Chicago PMI     63.0                        62.5                       

                15:00     USD      CB Consumer Confidence     68.2                        64.5                       

Feb. 01 13:15     USD       ADP Nonfarm Employment Change     190K                      325K                     

                15:00     USD       ISM Manufacturing Index     54.5                        53.9                       

Feb. 02 13:30     USD      Nonfarm Productivity (QoQ)     1.0%                      2.3%                     

                13:30     USD      Initial Jobless Claims     373K                      377K                     

                13:30     USD      Unit Labor Costs (QoQ)     0.9%                      -2.5%                    

                13:30     USD       Continuing Jobless Claims     3565K                    3554K                   

                15:00     USD       Fed Chairman Bernanke Testifies                                                                                              

Feb. 03  00:15     USD      FOMC Member Fisher Speaks                                                                                                   

                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                     

                15:00     USD      ISM Non-Manufacturing Index     53.2                        52.6

Rule:

The Australian dollar still isn’t in its good old days, but the performance is definitely improving. Resistance lines tend to work in a smoother manner than support lines, but they also work well. The pair move well together, not much volatility, but easy to chart and easy to trade with low risk factors

 Weekly Analysis and Recommendation:

The AUD/USD ended the week at 1.0658 +0.0025 (+0.24%)

The Australian dollar

closed out the  week close to a three-month high against its U.S. counterpart on Friday, as market sentiment was boosted by new signs of progress in talks to restructure Greek sovereign debt. As the USD fell due to weak economic news and the FOMC statement the Aussie seemed to be the biggest benefactor. The USD fell against all major currencies.

AUD/USD hit 1.0670 on Thursday, the pair’s highest since October 31; the pair subsequently consolidated at 1.0655 by close of trade on Friday, adding – over the week. 

The Good:

 US Durable Goods orders in Dec surprise to upside but how much was pulled forward from 2012 due to 12/31 expiration of full depreciation expensing?

 Jan US confidence rises to best since Feb ’11

 Richmond and KC manufacturing survey’s both rise

The Bad:

Q4 US GDP rises 2.8%, a touch below expectations but nominal GDP gains just 3.2%, the weakest since Q3 ’09. If deflator was in line with expectations, Real GDP would have been up just 1.3%. Real final sales up just .8% vs. 3.2% in Q3

 Initial Jobless Claims normalize at 377k after holiday distorted 356k last week

 Inflation expectations within UoM rise to 3.3%, the most since Sept and remains above the 20 yr avg of 3.0%. Expectations also rise to multi month highs in TIPS market

 New Home Sales remain weak, prices fall 12.8% y/o/y

 FOMC stretches out zero rates until late 2014, US$ resumes downward trend against everything. Fed destroying the price mechanism as if interest rates are artificially priced, what are assets really worth? If we don’t know what assets are really worth, how can capital be efficiently allocated?

There are significant reports due out this coming week, in Australia, New Zealand, and the US. We should see the USD pick up some of its strenght this week as the Fed statement becomes the past.

Upcoming Sovereign Bond Sales Dates

Jan 30  10:10  Italy   BTP/CCTeu auction

Jan 30  10:10  Norway  Nok 4.0bn 5.0% May 2015 bond

Jan 30  11:00  Belgium  OLO Auction

Jan 30  12:00  Norway  Details bond auction on Feb 06

Jan 31  10:30  Belgium  Auctions 3 & 6M T-bills

Jan 31  15:30  UK  Details gilt auction on Feb 07

Feb 01  10:10  Sweden  Auctions T-bills

Feb 01  10:30  Germany  Eur 5.0bn 2.0% Jan 2022 Bund

Feb 01  10:30  Portugal  Eur 0.75-1.0bn 3M T-bill

Feb 01  10.30  UK  Auctions 5.0% 2025 conventional Gilt

Feb 01  15:30  Sweden  Details nominal bond auction on Feb 08

Feb 01  16:00  US

Announces details of 3Y Notes on Feb 07, 10Y Notes on Feb

08 & 30Y Bonds on Feb 09

Feb 02  09:50  France  OAT Auction

Feb 02  10.30  UK  Auctions 0.125% 2029 I/L Gil

AUD/USD Forecast January 30, 2012, Technical Analysis

AUD/USD rose again on Friday as the Dollar continues to get sold off. The bad GDP numbers out of the United States certainly did nothing to inspire confidence in the economy, and as a result, traders went to other countries to look for yield. The Aussie has been strong lately, and has even broken out of a massive triangle that measures for a move up to the 1.12 level. The pair could pullback in the near term, and if it does – we would be buying those dips. We will not consider shorting this pair until we close well below the 1.04 level. 

AUD/USD Forecast January 30, 2012, Technical Analysis
AUD/USD Forecast January 30, 2012, Technical Analysis

AUD/USD Forecast for the Week of January 30, 2012, Technical Analysis

AUD/USD had a strong week as traders continue to pile into the Aussie. The Dollar got sold off after the Federal Reserve announced an extension of their ultra low interest rate policy on Thursday which absolutely pummeled the value of the Greenback against almost everything. The triangle on the daily chart suggests a move to 1.12, and with the easy money coming out of the United States, this is no longer such a wild thought. The 1.07 level is just above, but that resistance should give way. We are buying the pullbacks in this pair as long as we are above the 1.04 level.

AUD/USD Forecast for the Week of January 30, 2012, Technical Analysis
AUD/USD Forecast for the Week of January 30, 2012, Technical Analysis