Non Farm Payrolls contract by -17k jobs, although stock prices rally

Currency Trading Summary

U.S. Dollar Trading (USD) was subject to a volatile session, pressured against a number of majors due to an unexpected contraction in the Non Farm Payrolls for December by -17 k jobs (Forecast +63K), adding further concerns in anticipation of a US recession. The data confirmed the first decline in 4 years, as an upward revision from 18K to 81k in the month of December did little to ease the concerns. The data has prompted traders to expect further rate cuts from the Federal Reserve in the next meeting. Nonetheless, any further losses to the USD were limited as equity markets rose on Friday, boosted by reports of a takeover bid by Microsoft for Yahoo. In U.S share markets the NASDAQ was up 23.50 points (+0.98%) whilst the Dow Jones was also up by 92.83 points (+0.73%). Crude oil was also higher by the end of the New York session, gaining by US$0.34 a barrel to US$89.30. In other news, the Manufacturing ISM index rose to 50.7, above expectations of 47.3. 

The Euro (EUR) surged on the back of the poor jobs data out of the US on Friday, testing a record high, before any further gains were limited on profit taking. Furthermore, the EURO failed to sustain it gains as rallying US stocks, revived the greenback. Overall the EURUSD traded with a low of 1.4785 and a high of 1.4952 before closing the day at 1.4798 in the New York session. Euro zone PPI figures are scheduled for release on Monday with forecasts lying at 0.1% (Previous: 0.8%)

The Japanese Yen (JPY) once again tracked equity markets, with a late rally in US stock prices a cause for a pressured Yen. Overall the USDJPY traded with a low of 105.74 and a high of 106.73 before closing the day at 106.61 in the New York session.

The Sterling (GBP) saw a disappointing reading in Manufacturing PMI coming in at 50.6, down on the forecasted 52.5, hitting record lows for output, adding to further expectations the BoE will cut its interest rate later this week. Overall the GBPUSD traded with a low of 1.9646 and a high of 1.9942 before closing the day 1.9650 in the New York session. Services PMI will be made public today with forecasts lying at 52.0 (Prior: 52.4)

The Australian Dollar (AUD) was the best performing major on Friday buoyed by poor US jobs data and growing expectations that the RBA would move to increase interest rates on Tuesday the 5th of February, by 25 bps. Overall the AUDUSD traded with a low 0.8944 and a high of 0.9047 before closing the day at 0.9039 in the New York session. Trade Balance on Monday narrowed for the second consecutive month to -1963 mln, from a revised previous figure of -2162 mln.  

Gold (XAU) was worst affected from rebounding prices, XAU traded with a low 904.70 and a high of 936.50, before ending the session at 910.00
 
TECHNICAL COMMENTARY

Euro – 1.4815
Initial support at 1.4755 (Jan 30 low) followed by 1.4661 (38.2% retracement of the 1.4366 to 1.4953 advance). Resistance is now located at 1.4880 (intraday pivot point) followed by 1.49668 (Nov 23.2007 trend high).
 
Yen – 106.80
Initial support is located at 105.77 (Feb 1 low) followed by 104.97 (Jan 23 low). Initial resistance is now at 106.87 (Jan 31 high) followed by 107.47 (Jan 30 high)
 
Pound – 1.9665
Initial support at 1.9576 (61.8% retracement of the 1.9338 to 1.9660 advance) followed by 1.9500 (Jan 24 low). Initial resistance is now at 1.9941 (Feb 1 high) followed by 2.0034 (Jan 30 low)
 
Australian Dollar – 0.9045
Initial support a 0.8944 (Feb 1 low) followed by 0.8944 (Jan 31 low). Initial resistance is now at 0.9051 (Feb 1 low) followed by 0.9061 (61.8% retracement of the 0.9400 to 0.8513 low)
 
Gold – 910.10
Initial support at 903.80 (Feb 1 low) followed by 876.80 (Jan 23 high). Initial resistance is now at 936.80 (Feb 1 high) followed by 950.0 (Psychological round number)