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ADP Data and Fed Action Help Rally U.S. Dollar

By:   James Hyerczyk
  • 30-07-2008
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The U.S. Dollar rallied on the news that the ADP Employer Services Report was better-than-expected and on the news the Fed would extend its emergency lending program to Wall Street firms through January.

ADP reported that U.S. companies added 9000 jobs.  This was much better than pre-report estimates of a 59,000 job decline.  Traders interpreted this as a sign the U.S. economy is showing small signs of a recovery. Some traders brushed off the number, instead feeling the U.S. Non-Farm Payroll Report on Friday would be a more important indicator of the start of a recovery.

The Fed's action to extend the deadline for access to the borrowing window by investment firms was interpreted as a sign that the financial markets are still too weak to operate efficiently and effectively without the Fed's assistance.

In addition to the news from ADP and the Fed, a Euro Zone confidence index fell 5.3 points to 89.5 in July.  This was the biggest one month break since September 2001.  This is just another indication that the global economic slowdown has spread to the European nations.

One more sign that the selling is strong in the EUR USD was the inability to rally despite a surge in crude oil prices. 

Technically, the main trend is down.  The main trend turns up on a trade through 1.5768.  

This market could pick up some momentum if it can regain an up trending angle at 1.5677. Otherwise, look for the break to continue down to 1.5472.

**If Wednesday's low at 1.5521 holds, then look for the start of a possible short-covering rally to 1.5645 to 1.5674.**

 

Pattern

Main Trend:  Down 

Main Trend Top:  1.5768 (07-28-08)

Main Trend Bottom:  1.5302 (06-13-08)

Price

1.6038        Main Top (07-15-08)

1.5945        Main Top (07-22-08)

1.5798        Gann Angle Down

1.5768        Main Top (07-28-08)

1.5674        .618 Retracement ** 

1.5645        50% Retracement **

1.5575          New York Close

1.5472        Gann Angle Up 

1.5302        Main Bottom (06-13-08)

Time 

Aug 1          180-Day Cycle

Aug 2            90-Day Cycle 

 

 


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Next Analysis: USD JPY Runs Out of Buyers at Current Level
Content Provided by:
James Hyerczyk

James A. Hyerczyk is a registered Commodity Trading Advisor with the National Futures Association.

Mr. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor.


DISCLAIMER:
Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from James A. Hyerczyk and J.A.H. Research and Trading or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as "spread" or "straddle" trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.


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