U.S. Dollar Picking Up Strength

The U.S. Dollar is trading higher at the mid-session. The weaker than expected ADP Employment Report is making investors think twice about buying higher yielding assets.

The U.S. Dollar is trading higher at the mid-session. The weaker than expected ADP Employment Report is making investors think twice about buying higher yielding assets. Traders are now waiting for this afternoon’s Fed Beige Book. Investors are waiting for a possible surprise in this report because it is pretty well-known that this report is expected to reaffirm what the Fed has been saying that the economy is in for a rough recovery.

At the mid-session the Dollar futures index is posting a modest gain after failing to take out yesterday’s low at .7431.

The EUR USD has erased all of this morning’s earlier gains and is now trading lower for the day. Traders seem to be a little hesitant about getting aggressively long at $1.51 ahead of the tomorrow’s European Central Bank meeting. The ECB is expected to leave interest rates unchanged while providing an outline of details on how it will wind down its stimulus packages.

The GBP USD overtook a key retracement level at 1.6646 last night but failed to follow-through to the upside in a big way during the New York trading session. Currently this market is sitting inside of a major retracement zone at 1.6575 to 1.6646. A lower close will set up a potentially bearish closing price reversal top.

Traders continue to pressure the Japanese Yen after a Bank of Japan official expressed his concern about the rise in the currency. Despite official denials, traders are beginning to position themselves for a possible intervention by the BoJ if the Yen continues to appreciate too much. The Bank of Japan and the Japanese government want to avoid currency volatility. They both feel that economic growth cannot be sustained if the Yen is fluctuating too much.

The USD CHF is picking up strength at the mid-session after flirting with par the past few days. The weak U.S. ADP report is helping to encourage the selling of stronger currencies today.

The USD CAD is trading higher following this morning’s weaker than expected ADP employment report. Weaker equity markets triggered by the ADP report are helping to pressure the Canadian Dollar. A weaker than expected EIA crude oil report coupled with yesterday’s bearish API report is pressuring crude oil. This is helping to fuel the rally in the USD CAD at the mid-session.

Lower stock prices and a stronger Dollar have caused a drop in demand for higher yielding assets which is putting pressure on the AUD USD and NZD USD. Both of these markets have erased overnight gains and are now trading lower for the day.

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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