Today is Non-farm payrolls day in the
US. This report is one that the Forex market can react to in dramatic fashion
betimes. The Federal Reserve is very concerned about employment and will use
the data thereon to decide whether or not to start raising core interest rates
sooner rather than later. Today is also Good Friday, the start of the Easter
holiday period and a day on which many of the larger institutional traders will
be away from their desks. This could result in thin, choppy trading conditions,
which have the potential to exacerbate the normally expected short-term
volatility around the NFP release.
Meanwhile, yesterday the EURUSD pair
behaved very well, better than might have been expected, rising from the 1.08 support
level to hit 1.09, a full cent rise on the day.
…
but signals are mixed in a quiet, thin market
In fact, the leading indicator signals
regarding employment are somewhat mixed. The private firm, ADP, which attempts
to pre-empt the NFP outcome, showed a disappointing number, only registering
189k of additional jobs for March. Anything under 200k is regarded as below
par. On the other hand, the Initial Jobless Claims report, which counts the
number of new people applying for unemployment assistance, dropped by 20,000. When
this report was released, EURUSD initially
went in the direction one would have expected given the better than expected result.
However, ten minutes later (see chart above), the pair started to rise in a
determined fashion and did not stop until the Euro had gained, as mentioned, a
full cent on the US dollar by the time of the close of trading.
There is a palpable feeling out there
that the holiday period started early. That could be one factor in the apparent
resilience of the Single Currency.
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