Forexpros Daily Analysis - Evening session - GMT

Overnight Asia/Europe
 
• USD fall a bit in European trade, steady in Asia
• Volumes light ahead of US data

Today’s Economic Reports

• 7:30 AM CDT Non-Farm Payrolls forecast -40K

Looking Ahead

• Next week FOMC , Balance of Trade, Pending Home Sales,  and Michigan Sentiment
• G7 meeting starts next Friday

Summary
The Greenback is lower to open New York after quiet two-way trade in Asia was followed by a brief rally of GBP and EURO in European trade; volumes have been modest and traders are mostly sidelined ahead of today’s NFP data due out shortly. Although unemployment data has been weak the last several reports there is a sense that the worst may be over in certain sectors (such as construction or housing) but virtually all analysts and traders agree that the US economy is largely stalled and some argue that it is in recession. Today’s NFP number is only one on the road to see if the situation is still getting worse or is beginning to improve but the fact is traders are heavily focused on today’s data and will likely “overweight” the meaning of the data; extreme volatility could result. Although the USD consolidated for the most part some early weakness into the end of European trade was expected as traders trim positions ahead of the news. Cable inched higher until finding stops in-range helping for an initial high print in the 2.0000 area but active bids from cross-spreaders found the rate continuing to firm into the next round of stops at the 2.0020 area for a high print at 2.0035 before dropping back below Thursday’s highs to open New York. Traders report volumes were light on the move and there was no reason for the advance other than spec shorts covering back. EURO firmed as well and found the same scenario as the 1.5700 area gave way to find light stops above driving the pair to a 1.5720 high before the rate began a slow grind higher. High prints eventually were made at 1.5741 after stops were triggered and the rate opens NY firm around the 1.5720 area. Aggressive traders can look to sell a rally in EURO if not already long from the 1.5550 area this week. Longs should look to liquidate into the highs if they come today around the 1.5800/50 area. In my view, the EURO is still the firmest on the board and a test of the 1.60 area is very likely especially if US data comes out worse-than-expected. USD/JPY again consolidated overnight on the holiday shortened trading day in Asia; volumes very light and technical trade was the rule. Highs at the 102.70 number were not enough to find any stops and the rate was offered into the close of European trade. Lows around 102.18 still holding; look for a violent start to the day.

USD/JPY Daily

R3:  103.50
R2:  103.20
R1:  102.70/80
Current Price: 102.30
S1:  102.00
S2:  101.80
S3:  101.50

Rate unable to extend gains on third attempt and the lower high this morning to start NY suggests that the sellers are coming to the table after Tuesday’s rally failed to extend to the 103.00 handle. Stops for longs likely under the Wednesday low around the 102.00 for the weak hands but traders report the 101.50 area is where the big stops are resting. Expect bids to have been pulled also until after NFP shortly leaving the rate vulnerable to a sharp break.

GBP/USD Daily

R3:  2.0080
R2:  2.0050
R1:  2.0020/30
Current Price:  2.0002
S1:  1.9980
S2:  1.9950
S3:  1.9920

Rate likely to consolidate as lift to highs was stop driven and only light volume; shorts stopped out overnight can be re-set early next week; the rate unlikely to see much volatility net on the day but could have a whipsaw intraday so be nimble if holding anything during the news. Stops above the 2.0080 area likely larger but offers are said to be resting over the 2.0050 area which may be the top for the day. Stops under the 1.9950 area and more at 1.9920 likely to be met with bids.