Break in Yen Indicates Money Flowing to Safe Haven Dollar

The U.S. Unemployment Rate rose more than expected to 9.7%, up from 9.4% in July. The August Non-Farm Payrolls Reports showed a loss of 216,000 versus guess of 225,000. July was revised to show an even greater loss of jobs.

The U.S. Unemployment Rate rose more than expected to 9.7%, up from 9.4% in July. The August Non-Farm Payrolls Reports showed a loss of 216,000 versus guess of 225,000. July was revised to show an even greater loss of jobs.

The Dollar fell against most major Forex markets this morning following the release of the U.S. Employment Report. The early rally in the equity markets triggered demand for higher risk assets, but as the stock market neared a key retracement area, these Forex pairs began to weaken.

The key indicator is likely to be the USD JPY. If this currency pair continues to strengthen, this would indicate that traders are treating the Dollar as the safe haven currency of choice.

After an initial thrust to the upside, the EUR USD is beginning to weaken. If traders begin to interpret this report as bearish to the U.S. economy then look for the Dollar to strengthen. If traders believe that the fewer numbers of jobs loss than estimated indicates a possible bottoming in the economy then look for the Dollar to weaken.

The GBP USD is continuing the short-covering rally it began earlier in the week. This move is a combination of an oversold market and a better economic outlook for the U.K. economy.

Firmer energy and equity markets following the release of the Non-Farms Payroll Report are helping to boost the Canadian Dollar. If stock indices and crude oil can maintain their early strength then the USD CAD is likely to feel downside pressure.

The initial rally in the equity markets following the jobs number helped give the higher yielding NZD USD and AUD USD a boost. The Australian Dollar is getting additional support from a better than expected GDP report from earlier in the week. Traders are beginning to price in the strong possibility of a rate hike by the Reserve Bank of Australia.

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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