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Source: ForexYard

The euro came off its recent highs following dovish ECB comments and strong employment data from the US. If yesterday’s economic data is any hint of today’s payroll numbers, the dollar rally may prove to have legs.

Economic News

USD – Dollar Mixed After Strong US Economic Data

The greenback did not see a fluent direction in the market on the back of better than expected US economic data.

The US trading session was filled with strong economic reports that saw US unemployment claims fall to 415K from 457K for the previous week. Economists had expected 420K new jobless claims. ISM Non-Manufacturing PMI was significantly stronger, up to 59.4 after an expected 57.4 mark. Any reading above the 50.0 level represents growth in the economy. US factory orders also unexpectedly rose by 0.2% on expectations of a 0.2% decline.

Strong economic data combined with the ECB interest rate decision had the USD mixed versus the majors. Versus the euro the dollar saw its strongest gains of the new year. The EUR/USD closed the day down at 1.3625 from 1.3794. The GBP/USD finished the day lower but not before the pair pushed near a three month high at 1.6277 and the pair ended at 1.6140 from 1.6184. The AUD/USD was trading firmer at 1.0170 from 1.0103.

The market’s attention will now shift to the all-important US Non-Farm Payrolls report which is due out today at 13:30. Economists forecast the US economy added 138K new jobs in the month of January but the unemployment rate is expected to rise from 9.5% from 9.4%. Strong employment data from the US may have significant ramifications on the dollar and the Feds outlook on the economy. Should better than expected non-farm data show an improving employment scenario, the Fed may begin to pull back on their loose monetary policy which would be a positive for the dollar.

Initial support for the EUR/USD comes in at 1.3570, followed by 1.3500. Resistance is located at this week’s high of 1.3860.

EUR – Euro Falls On Trichet Comments

The European Central Bank left their benchmark interest rate steady earlier today at 1.0% while the euro sold off following the announcement and the selling picked up speed during the Q&A session with ECB President Jean Claude Trichet.

During the comment session, Trichet told reporters risks to the economic outlook remain tilted to the downside while the medium term outlook for inflation is balanced but could move higher. The selling of the euro intensified following Trichet’s comment that interest rates remained at an appropriate level and the recent data has not changed the assessment by the ECB.

The euro was sold across the board yesterday with the EUR/USD falling as low as 1.3608 before recovering to 1.3625. The pair opened the day at 1.3795. The EUR/CHF was also down sharply at 1.2887 from 1.2971.

As traders’ expectations for an interest rate increase in the euro zone get pushed back further into the future, the value of the EUR/USD will decline. However, expectations remain for rising European rates. The next meeting for the ECB could spur further euro gains, as could an extension of the Federal Reserve’s loose monetary policy.

JPY – Yen Continues to Strengthen

The yen saw high volatility yesterday, influenced by strong US economic data and the ECB interest rate decision. However, the pair ended the day near its opening price.

The USD/JPY traded at one point in the day as high as 82.05 before ending the day down slightly at 81.55. The pair began yesterday trading at 81.63. Better than expected employment and non-manufacturing data had the yen on its back foot as the dollar began to strengthen. However, towards the end of the day the gains in the pair failed to hold. A similar situation arose following the downgrade in the sovereign credit rating of Japan last week.

The inability of the USD/JPY to make new highs does not bode well for the pair and the bias is to the downside. Support for the pair is found at 81.30, followed by the December low of 80.90. Resistance is located at yesterday’s high of 82.05 and the January 27th high at 83.20.

Oil – Crude Could Rise On Positive Employment Numbers

Spot crude oil prices dipped yesterday following a rising dollar. Traders remain focused on economic data and geopolitical events in the Middle East.

The price of spot crude oil ended the day at $90.75 after an opening day price of $91.34. The commodity traded as low as $90 but held at the support level.

Influencing traders to sell the commodity was stronger than expected US employment data as well as better US factory order numbers. This helped to push the dollar up, making crude oil prices more expensive for those that hold currencies other than the dollar.

Crude prices have undergone a period of higher than usual volatility following the outbreak of mass protests in Egypt which sparked close to an $8 rally. However, spot crude oil prices failed to move above its previous high of $93.00

Today crude prices will be influenced by the release of US Non-Farm Payrolls. Better than expected employment data may provide traders with a reason to reverse yesterday’s declines in the price. Support for spot crude oil is found at $90.00 and $87.00. Resistance is located at the $93 level.

Technical News

EUR/USD

The two day decline in the value of the EUR/USD looks to have found support at a rising support line underneath the late January lows. This may be an opportunity to enter long on the pair with a first target at this week’s high of 1.3860.

GBP/USD

The pair is currently testing the resistance level of 1.63, a price last seen in November. A breach of this level would then set the stage for a test of the 2010 high of 1.6460.

USD/JPY

The inability of the USD/JPY to make new highs does not bode well for the pair and the bias is to the downside. Support for the pair is found at 81.30, followed by the December low of 80.90. Resistance is located at yesterday’s high of 82.05 and the January 27th high at 83.20.

USD/CHF

With only minor divergences, the pair has consistently traded below the downward sloping trend line off the May 2010 high. Currently the price has reverted back to this trend line, making for a possible entry opportunity short with a target the swing low at 0.9300.

The Wild Card

Crude Oil

Following an almost $8 gain in crude oil prices, a bullish flag pattern has formed on the daily chart. The chart pattern suggests forex traders may target the $98.40 level should a breakout occur to the upside.

Forex Market Analysis provided by ForexYard.

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Microsoft (MSFT) may sell debt as soon as today to reward shareholders, reports Bloomberg. Citing a regulatory filing, the proceeds may be used for expenditures, stock buybacks, andor acquisitions. According to a person familiar with the transaction, the company may issue 5-, 10-, and 30-year senior unsecured debt in benchmark size.

The euro has declined against the US dollar in the forex markets today after reaching a medium-term top in Tuesday’s trading at the 1.3861 exchange rate. The EUR/USD has fallen for a second straight day and was sold off heavily today on dovish comments for  interest rates from European Central Bank Pres. Jean-Claude Trichet. The euro/dollar pair opened the day at the 1.3793 exchange rate and marked an intraday low point at 1.3610.

EUR/USD Daily Chart – The EUR/USD pair has been rejected lower the past two days after the recent high Tuesday and looks primed to test lower levels. The RSI indicator has turned down from close to overbought levels to a 55 reading while the MACD indicator forecasts a potential moving average crossover. If the pair breaks through support around 1.3580, we can look for a test of the 1.3500 level and lower previous (November) support at the 1.3450 level.

Article by FxNewsEurope, Euro Forex News

This morning, Diamond Offshore Drilling (DO) declared both its regular dividend of 12.5 cents per share, as well as its special dividend of 75 cents per share, maintaining the amount paid to shareholders last quarter. Based on the current stock price, investors can expect a yield of about 4.8% going forward.

Energy shares are mostly lower in mid-day trading as crude oil futures decline but trade above the $90-a-barrel mark. Light, sweet crude oil for March delivery traded down $0.26, or 0.3%, to $90.58 a barrel. In mid-day news, ADRs of Royal Dutch Shell (RDS.A) are down after the European oil major reported earnings that came short of what analysts were expecting. Meanwhile, Tesoro (TSO) shares are down after Reuters reported that the US refiner said that a fire last month at the company’s 58,000 barrel per day refinery in North Dakota had a minimal impact on production. The refinery has reportedly run beyond its planned rates and repairs are expected to finished in March, the report said.

By CountingPips.com

The US dollar has been gaining on most of the major currencies in forex trading action while the euro has fallen sharply as the European Central Bank held its interest rate steady earlier today. The dollar has increased on the day versus the euro, British pound, Canadian dollar, Japanese yen, New Zealand dollar and the Swiss franc while the American currency has fallen against the Australian dollar, according currency data from Oanda in the afternoon of the US trading session.

The US stock markets have been moderately higher in today’s session with the Dow gaining by approximately 20 points, the Nasdaq increasing over 4 points and the S&P 500 up by close to 3 points at time of writing.  Oil has edged lower to $90.62 per barrel while gold futures have jumped $18.20 to $1,349.70 per ounce.

News out of Europe today focused on the European Central Bank which held its interest rate steady as widely expected by market forecasts and economists. ECB President Jean-Claude Trichet’s comments on the European economy helped weaken the euro as Trichet dampened expectations of an interest rate increase. Trichet commented that, “inflationary pressures over the medium to long term should remain contained” and “the current key ECB interest rates still remain appropriate.” Traders took Trichet’s comments as dovish for interest rates and sold the euro in today’s market.

Economic news releases today in the US showed that new weekly jobless claims declined more than expected through January 29th. Jobless claims fell by 42,000 workers to bring the jobless claims to a total of 415,000 workers last week. Continuing claims also fell for the week by 84,000 workers.

The ISM non-manufacturing survey was also released today and showed that service sector economic activity rose more than expected to a score of 59.4 in January. This follows a score of 57.1 in December and beat market forecasts looking for a 57.2 score for the month.

EUR/USD Chart – The euro falling sharply today versus the dollar in trading as the EUR/USD came under pressure on  the comments from ECB President Jean-Claude Trichet.  The euro had reached a recent high versus the dollar in yesterday’s trading near the 1.3860 level before today’s decline.

Verizon (NYSE:VZ) announced that its board has authorized the corporation to repurchase up to 100M shares of its common stock. The board also determined that no additional shares may be acquired under a previously approved program to repurchase up to 100M shares. Under the previous program, which was due to end February 28, approval remained to purchase approximately 60M shares. The authorization to repurchase shares terminates when the aggregate number of shares repurchased reaches 100M or at the close of business on February 28, 2014, whichever is earlier.

Wells Fargo & Co. (WFC) is just higher after Bloomberg reports the bank is planning to withdraw money from its hedge-fund firm, Overland Advisors, which is seeking new investors. Wells is responding to US limitations on bank risk taking. The bank will withdraw $150 million every quarter until the first half of 2014, the report said. Wells Fargo shares are up 0.24%, or $0.08, to $32.80.

By CountingPips.com

U.S. weekly jobless claims decreased by more than expected in the week that ended on January 29th, according to a release by the U.S. Labor Department today. New jobless claims fell by 42,000 workers to a total of 415,000 unemployed workers and surpassed market forecasts that were expecting jobless claims to fall to 420,000 workers following the previous week’s 457,000 revised number of claims.

The 4-week moving average of newly unemployed workers rose by 1,000 workers from the previous week to a total of 430,500 workers.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending January 22nd also fell for the week. Continuing claims decreased by 84,000 workers to a total of 3,925,000 unemployed workers. The four week moving average of continuing claims dropped by 50,500 workers to a total of 3,929,500.

By Chris Vermeulen, TheGoldAndOilGuy.com