InvestMacro FX

Google (GOOG) is tightening its grip on its Android software, and Google’s partners are said to be upset. The company’s agreements with Android partners are said to be more “onerous” now and reportedly include “non-fragmentation clauses” that give Google video power over tweaks others want to make to Android. Additionally, sources say Google has “tried to hold up” some Verizon (VZ, VOD) Android devices that use Microsoft (MSFT) Bing as its search engine. Some companies have complained to the Justice Department.

By CountingPips.com

March’s government nonfarm payrolls employment data surpassed economic forecasts with a gain of 216,000 jobs for March while the unemployment rate fell to 8.8 percent. The March data marked the fastest pace of hiring in almost a year and follows a revised gain of 194,000 jobs in February and a revised gain of 68,000 jobs in January.

January’s employment data was revised higher to an increase of 68,000 jobs after a gain of 64,000 jobs was previously estimated while February’s data was revised from a gain of 192,000 to 194,000 jobs.

Market forecasters and economists were expecting the nonfarm payroll report to show a gain of approximately 190,000 jobs in March with the unemployment rate remaining at 8.9 percent.

The unemployment rate, now at 8.8 percent, fell from 8.9 percent in February and has reached its lowest level in just about 2 years.

Private companies added 230,000 jobs in March as the service sector created 199,000 jobs and the goods producing sector advanced by 31,000 jobs. Government hiring declined by 14,000 workers in March.

Professional and business services led the way in the service sector with job increases of 78,000 workers while education and health services hiring added 45,000 jobs in March. In the goods producing sector, manufacturing jobs rose by 17,000 workers while construction jobs fell by 1,000 workers.

US Dollar mixed in today’s Forex Trade

The US dollar has been mixed in forex trading action following the monthly government jobs report. The American currency has been gaining ground versus the Japanese yen and the Swiss franc while showing a decline versus the euro, British pound sterling, Australian dollar, New Zealand dollar and the Canadian dollar at time of writing.

The US stock markets, meanwhile, have been on the rise in trading today with the Dow Jones industrial average increasing by over 80 points while the NASDAQ has been higher by over 15 points and the S&P 500 has increased by approximately 10 points at time of writing.

In commodities, oil has increased to the $107.28 level while gold futures have decreased to trading at the $1,425.00 level so far today.

ForexCT Afternoon Thoughts 01-04-11

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

By Russell Glaser

A recent group of Federal Reserve members have come out in favor of tightening US monetary policy and scaling back the Fed’s $600B quantitative easing program. Today’s non-farm payrolls report could go a long way to convince additional Fed members that the time has come to begin the normalization of monetary policy. This would ultimately lead to dollar strength, but more vocal support will ultimately be needed.

There have been multiple instances of Federal Reserve members publicly declaring their support for the reigning in of US monetary policy which in turn boosts the dollar.

Last Friday, St. Louis Federal Reserve Bank President James Bullard said the Fed should review its program of quantitative easing in light of recent positive economic data as the US economy, “Is looking pretty good.” Bullard, who does not have a vote on the Federal Reserve Open Market Committee said during the upcoming April meeting, the Fed may reexamine its decision to purchase $600B in US government bonds in order to lower US interest rates further and support the economic recovery.

Bullard continued his vocal support for tightening of monetary policy in regards to QE II, “The economy is stronger and inflation is higher than when we did the decision,” Bullard said. “So why aren’t you adjusting policy? If you are not adjusting, you don’t have a state-contingent policy. It would be an important signal to send.”

Philadelphia Federal Reserve Bank President Charles Plosser proposed a strategy of raising interest rates and reducing the Fed’s balance sheet on which it holds billions of dollars of US treasuries and other bonds. Plosser also does not have a vote on the Federal Reserve Open Market Committee

Yesterday Minneapolis Fed President Narayana Kocherlakota helped to boost the dollar when he commented to the Wall Street Journal that the fed funds rate could rise by 75 bp by the end of 2011. Kocherlakota is considered an inflation hawk and is a voting member on the Federal Open Market Committee.

Further speeches today by Charles Plosser and New York Fed President William Dudley may also have an impact on the dollar. Dudley who does have a vote on the FOMC is considered an inflationary dove.

The Fed focuses heavily on inflationary data and unemployment numbers. Core inflation in January rose by 1.6% on a yearly basis, a rate well within the Fed’s target. Unemployment will need to rise as well. While the February numbers were a positive sign with the US adding 192K new jobs to the economy, today’s jobs report will also have to rise above expectations of 191K to influence the opinion of those in support of QE II and loose monetary such as Ben Bernanke, Janet Yellen, and William Dudley.

This should keep the dollar on its back foot, particularly versus currencies with expectations for central banks to raise interest rates such as the euro, pound, and Australian dollar.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

Today’s non-farm payrolls report combined with the ISM Manufacturing PMI are expected to show further improvement in the US economy. With the increase of risk appetite, commodity prices have soared, benefitting the commodity currencies of Australia and Canada.

Economic News

USD – Jobs Report Expected to Show Improving US Economy

The dollar paired its losses in the New York trading session after the release of worse than expected economic data. For the day, the greenback was mixed against the majors following a slew of negative reports.

US factory orders dropped to -0.1% m/m on expectations of a 0.5% rise. However, the previous month’s report was revised higher to 3.3% from 3.1, giving the report a more positive tone. Weekly unemployment claims were higher than expected at 388K while economists had forecasted 379K new jobless claims. Last week’s report was revised lower to 394K from 382K, adding to the negative tone of the report. The Chicago PMI declined to 70.6 in March from 71.2 in February. Most analysts had forecasted a decline to 69.9. This is the strongest number from the report since July 2009.

The dollar’s performance was mixed as rising commodity prices boosted the commodity-linked currencies while the dollar trimmed its morning losses versus the euro and the pound. The AUD/USD traded at a new record high of 1.0373 and closed the day at 1.0335. The USD/CAD continued to push lower and closed just below the 0.9700 level. The EUR/USD was up above the 1.4200 level again but failed to hold those gains and finished the day at 1.4163. Versus sterling, the GBP/USD rose to a high of 1.6152 from 1.6070 but later fell to a low of 1.6016 and closed at 1.6030.

All eyes will be on two key reports today; US non-farm payrolls and the ISM Manufacturing PMI. Both are expected to show continued improvement in the US economy. The jobs report will be more heavily weighted as the Fed targets improved employment data when setting monetary policy. Given the recent support by Fed officials for the tightening of US monetary policy, the report will be a key influencer on the Fed’s decision to keep a loose monetary policy and continue with its quantitative easing program.

Strong job numbers should be dollar negative as this would continue the trend of increasing risk appetite in the markets following the geopolitical events in Africa and the earthquake in Japan.

EUR/USD resistance comes in at last week’s high of 1.4250, followed by the November high of 1.4280. A breach of this level would target the January 2010 high of 1.4580. To the downside, support is located 1.4060 off the rising trend line from January. This level also coincides with the 20-day moving average. The weekly low of 1.4020 may also prove to be supportive. A 31.8% retracement from the January low could come into play at 1.3935.

EUR – Euro Climbs Against the Yen and Swiss Franc

The euro continues to climb, supported by expectations for an increase of interest rates next week by the ECB. Further support was given for an interest rate hike following the release of the German unemployment change which showed the number of people out of work declined by -55,000 to 3.01M. Economists had forecasted a reduction of only -24,000. The report was also boosted by last month’s revision up to -54,000 from -52,000. The improving unemployment picture is surprising given the unstable month that passed as the geopolitical events in Africa and natural disaster in Japan did not deter German employers from adding to their payrolls.

Traders were sending strong bids for the euro after higher than expected inflation numbers. The CPI Flash Estimate y/y was higher at 2.6% for the year. Economists had forecasted a 2.4% increase. The rising inflation numbers reinforces the market’s view for an ECB rate hike at its next meeting April 7th and should bring further bids to the euro.

The EUR/JPY continued to climb, rising sharply to close near its high of 118.60 from an opening day price of 116.82. The pair is quickly closing in on its short term target at 119.60 with an extension possible to 128.00. Support is found at 116.00

The EUR/CHF made a close at 1.0344, above the previous resistance at 1.3038. The pair should encounter selling at the 200-day moving average which comes in at 1.3070. Strong resistance is located at the February high at 1.3200. A breach here would target 1.3670 and 1.3830. To the downside, support is at 1.2820 followed by 1.2730.

JPY – Yen Continues to Weaken

The JPY is on its back foot versus the dollar and the euro as the currency continues to weaken following the G7 intervention and a renewal of the carry trade. As risk sentiment improves, traders have been quick to sell both the dollar and the yen as funding currencies for carry trades, helping to push the yen lower.

Yesterday the USD/JPY closed higher at 83.71 from an opening day price of 82.56. The close made significant headways on the charts, closing above the first resistance level at 83.30 above the falling trend line off of the September high.

Momentum has swung to the upside as the monthly chart shows both rising stochastics and increasing momentum. The monthly candlestick also closed on a hammer pattern, indicating further gains in the pair may be in store. Resistance comes in at 84.00. A breach above this level will target 84.60, followed by 85.90. To the downside, the previous trend line should be supportive at 83.35, followed by 82.55 and 82.00.

OIL – Crude Hits 2 1/2 Year High Amid Mid East Unrest

Violence in Libya, coupled with the aftermath of the devastating earthquake in Japan, continue to elevate the price of crude oil. On Thursday, the commodity hit a 2 1/2 year high, peaking at $107.62 a barrel before staging a very slight downward correction. Currently oil is trading at $106.85.

Analysts are warning that the price of oil is unlikely to come down in the near future, and may even continue to rise. As for today, heavy fluctuations are anticipated following the release of this month’s US Non-Farm Payrolls. The employment figure is considered one of the most important economic indicators on the forex calendar, and consistently generates heavy volatility. Today’s figure is expected to come in at 191K, slightly less than last month. If true, it would signal further growth in the US employment sector which could result in further bullishness for oil.

Technical News

EUR/USD

The EUR/USD pair climbed about 1,300 pips in the past 10 weeks, and it seems that the bullish momentum has the potential to proceed. Currently a rounding bottom patterns appears to be forming on the 4-hour chart, suggesting that the pair might reach as high as the 1.4250 level before the week ends. Going long seems to be the right choice today.

GBP/USD

The cable’s range-trading pattern continues and the pair is now trading near the 1.6050 level. Currently, a bullish cross takes place on both the 4-hour and the 1-day charts’ Slow Stochastic. It appears that a bullish session might be expected today. Going long could be the right strategy today.

USD/JPY

Momentum has swung to the upside as the monthly chart shows both rising stochastics and increasing momentum. The monthly candlestick also closed on a hammer pattern, indicating further gains in the pair may be in store. Resistance comes in at 84.00. A breach above this level will target 84.60, followed by 85.90. To the downside the previous resistance at 83.30 will turn into a support line, followed by 82.00 and 80.20.

USD/CHF

There is a very distinct bullish channel formed on the 4-hour chart, and the pair is currently trading in the middle of it. Nevertheless, as both the Slow Stochastic and the RSI on the daily chart are providing bearish signals, it seems that a bearish correction might take place today, with potential to reach the 0.9100 level.

The Wild Card

Oil

Crude oil’s bullish trend appears to be unstoppable and crude yesterday reached as high as $107.60 a barrel. In addition, as all technical oscillators on the 8-hour chart provide bullish signals, it seems that another bullish session may be impending. This might be a great opportunity for forex traders to join a very popular trend.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

The market acts like a girl… fickle minded. You just don’t know what she wants exactly. Here’s the situation: Think of the market as a girl, the US as the hotshot boyfriend, and you (the trader) as the “friend.”

There are times when the boyfriend does something stupid which turns her off. You, being the “friend,” live for those instances because the girl runs to you. Well, it’s obvious that you like to go and ride with the girl. However, there are situations when you think that your secret love would lean to you because of a crazy action that the bf did. On the contrary, she even loved the guy more. What? Yeah. The antics that you expect would give the guy negative points in fact have increased his charm.

It’s jaded. I know.

So what can you do? The answer is nothing really. You just need to be around and hope that she will turn back to her sweet “friend” again.

——-

Generally, bad US fundamentals weigh down on the USD (bad US = bad USD). Risk aversion from the US capitals markets causes a sell-off of the USD. This is logical. However, there were several instances in the recent past that this did not happen. The USD even jumped despite some dismal economic data from the US. Why? Some say that the market hedged their money in the USD away from the US capitals markets.

The point that I’m trying to make is that it is really hard to gauge where the market is going even if you have an idea regarding the economic outlook of the US (based on preliminary estimates). Sometimes, the market will sway just as you expect it to be. Sometimes it does not.

The difference between me and the “friend” in the real world setting is that I can make the girl favor me over the other guy 99 times over a 100 (sike!). I have a hand on the outcome.

However, I cannot do that in trading forex. I can only be a “friend.” I can only wait and be prepared for the market to come to me; to work on the opportunities being presented.

Sometimes I win. Sometimes I don’t. In the forex market, no matter how well positioned you are, it is still all up to her.

More on LaidTrades.com …

For most of us, crude oil price soaring higher is definitely unfavorable as gas price and public transportation cost will most likely rise as well and this could hurt our pockets on a daily basis but for some traders, this could be a good opportunity to make some moolah.

Chart-wise, WTI crude oil (For those who do not know, WTI means West Texas Intermediate and is a benchmark in oil pricing) was moving within an ascending channel for almost a year until it broke out last February. After which it started consolidating to what could be an ascending triangle or a cup and handle pattern. It really doesn’t matter which among these 2 patterns the crude oil chart is consolidating into since both have the same characteristic, when it breaks out, it goes up. So if the $106.94 resistance gets cleared out then we can see an upside target of $115.00. That’s almost 10%. I know this sucks but this is what my technical analysis is telling me, I hope I’m wrong… On the downside, $100.00 is a strong level of support technically and psychologically. If this hurdle gets taken out, the next support could be 95.00 US dollar.

Like what my colleague mentioned on his WTI crude oil post last week, “On the fundamental/political side, the tension in Libya has been pushing the prices of oil higher. With the US, France, UK and other countries teaming up in bombing Muammar Gaddafi’s forces and the later still not giving up, risk aversion could remain. Until peace in Libya is restored and a new government is formed, the price of oil could continue to rise”.

More on LaidTrades.com …

The markets are hovering on the flat line today as they await the jobs numbers tomorrow morning. Oil is spiking higher along with gold and silver as the Dollar declines and Libya becomes a bigger mess.

Club EWI’s free introductory tutorial on the Wave Principle is the key to unlocking the mystery of market behavior

By Elliott Wave International

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— OR —

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If you answered the second choice, then you’re in the right place. Fact is, you can probably count on all hands — of a millipede — the number of times the mainstream financial media has provided conflicting reports on how a certain news event “moves” a particular market. Case in point, the recent headlines below on the Dow Jones Industrial Average:

• March 31 at 8:44 AM: “US Stocks Edge Lower After Jobless Claims Data” (International Business Times)
• March 31 at 9:53 AM: “US Stocks Slightly Higher After Jobless Claims Data” (Wall Street Journal)

The Elliott Wave Principle resets the stage from an entirely different starting point. Wave analysis asserts that while certain news events can have a temporary, near-term effect on market prices, the larger trend is governed by one consistent force: social mood, or collective investor psychology.

This source of markets’ trending power unfolds in calculable wave patterns visible on a market’s price chart. Elliotticians know of 13 such patterns, each of which adheres to specific rules and guidelines. Ultimately, if you can identify one of these patterns, you can project what direction the pattern will move prices AND how far into that direction prices may go.

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