Effects of U.S. Jobs Report May Linger in Forex Markets Today

Last week’s better than expected U.S. Employment Report helped theDollar rally on Friday as investors thought it sent a signal that theU.S. economy was ready to pull the world out of its recession.

Last week’s better than expected U.S. Employment Report helped the Dollar rally on Friday as investors thought it sent a signal that the U.S. economy was ready to pull the world out of its recession. The positive effect on the Dollar from last week may help support it today.

Trading may be light early this week because of the Fed meeting later in the week. Tomorrow the U.S. Federal Reserve Open Market Committee begins a two-day meeting. Expectations are for the Fed to leave rates at near zero. The market moving news will be whether the Fed announces an exit strategy and what it will do about its quantitative easing program.

Talk has been circulating that the Fed is getting ready to start hiking rates. At this month’s meeting, it is expected to put an end to the rumors. Traders have also been talking about whether the Fed will extend its $300 billion asset buyback program which is expected to end in September.

Look for weakness in the GBP USD. Last week the Bank of England voted to extend its asset buyback program by pledging an additional $84 billion. This sent a signal to the market that the U.K. economy may still be in a recession. This morning a report is out saying the BoE is concerned about a debt deflation trap. Technically this market formed a closing price reversal top on the weekly chart which is likely to lead to pressure today.

Last week the European Central Bank voted to leave rates unchanged. Friday’s U.S. unemployment report helped put pressure on the Euro as traders are beginning to believe the U.S. economy will recover before the Euro Zone economy. This market also formed a weekly reversal top. Selling pressure could send this market lower once this technical pattern is confirmed.

The USD CAD posted a weekly closing price reversal bottom last week. Now that it appears the Dollar has broken away from the stock market, look for downside pressure on the Canadian Dollar.

Sellers could also be present in the higher yielding AUD USD and NZD USD today. Speculators are looking for better times ahead for the U.S. economy. This should mean higher interest rates later on which could lead to more selling pressure on the Aussie and Kiwi.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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