Forex News and Reports

Trading the moment of the NFP relaese is hit and miss, trading the momentum of the NFP is a better bet.

The volatility of the 1st Friday of each month that NFP is released is not just down to the number of jobs created, this is a complex release that has four components that Traders must be aware of:

1. The actual number of jobs reported as being created this month; July’s number is expected in at 125k, and is an average of analysts’ figures that range from 300k to 20k. The High to Low difference in opinion is enormous.
2. The revision to the previous month’s number; Probably as important as the new number, the revision can add 50k to the previous amount, and that is what creates the volatility as Traders re-align their previous thoughts on what happened four weeks ago.
3. The Employment Rate; Currently at 4.5% is one of the lowest in the world and has stayed between 4.5-4.6% recently. Any move outside this area would be dramatic
4. Average Hourly Earnings; Looking at coming in around 0.4%, this is the number that the Fed stated was causing it concern as an inflationary read.

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Measures the number of new jobs created in the previous month, excluding the farming industry. A rising trend has a positive effect on the nation’s currency. The number of new jobs being created is one of the most important indicators of the economy’s health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.

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Each month, excluding January, the Reserve Bank of Australia (RBA) Board meets to set the nation’s short term interest rate (i.e., “cash rate”). The Board announces the decided rate shortly after the meeting, and when there is a change in rates they also releases a statement that contains the economic conditions that effected their decision. A rising trend in interest rates has a positive effect on the nation’s currency. Short term rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. High interest rates attract foreigners looking for the best “risk-free” return on their money, which can dramatically increases demand for the nation’s currency. The decision on where to set interest rates depends mostly on inflation. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 3%, they will respond by raising interest rates in an attempt to bring prices down.
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The forthcoming week will be dominated by US economic data, of which there is plenty, the highlight being Friday’s nonfarm payrolls. The ECB make a rate announcement on Thursday and the monetary committee  is expected to keep rates unchanged at 3.0%.

The past week was light on economic data and most of the majors were tightly range-bound. The Japanese yen retreated and hit an all-time low against the euro after the release of soft inflation data, while the Canadian dollar made significant progress as oil prices are on the rise again. Sterling finished the week strongly after a positive CBI industrial trends survey and a quarter 2 GDP estimate put at 0.8%.
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Time Zone : GMT+2

London : 9.00 AM - 18.00

New York : 14.00 - 23.00

Tokyo : 2.00 AM - 10.00 AM

Sydney : 23.00 - 07.00 AM

There are at least two benefits in knowing the ‘trading hours’ of Forex markets:

1. The first hour after a major market opens is considered very important and often indicates how the session might develop.
2. In periods when market ‘trading hours’ overlap, liquidity tends to increase as more traders participate in the FX market.

Pound bulls were in for a nasty surprise this morning when UK Visible Trade Balance reported a much larger than expected deficit of -6.75 Billion pounds versus consensus calls of -5.7 Billion.  Higher oil prices and continued decline of competitiveness in UK’s industrial sector  produced the second largest deficit on record. The news does not bode well for cable longs still hoping for an end of the year rate hike from the BOE as the deteriorating trade position of the UK economy will depress the country’s GDP growth going forward and will likely keep the Central Bank on the sidelines for the rest of the year. After rallying to 1.8450 sterling dropped bellow the 1.8400 level in the aftermath of the announcement while the EUR/GBP cross bounced off .6900 support to challenge yesterday’s highs. As we noted in our weekly piece, “with the BOE standing still while the rest of the majors central banks are aggressively hiking the pound continues to be the weakest member of the pack.”

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AUDCAD– AUD/CAD has made a massive triple bottom with daily lows from 6/13 (.8142) , 6/21 (.8122) , and 6/29 (.8119).  The triple bottom along with bullish divergence on the daily points to a turn in this pair.  Favoring the bullish stance is the 78.6% fibo of the .7502-1.0546 April 2001 to February 2004 bull wave at .8156.  CCI on the daily has crossed above 0 and MACD slope is positive.  The hourly chart shows that a correction of the rally from .8119-.8310 has found support at the 38.2% fibo of that rally at .8237.  Additional weakness probes the 50% and 61.8% fibos at .8214 and .8192.
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