Dollar Up Slightly Ahead of U.S. Jobs Report

The U.S. Dollar is up slightly overnight ahead of today’s U.S. Non-Farm Payrolls Report.

The U.S. Dollar is up slightly overnight ahead of today’s U.S. Non-Farm Payrolls Report. Today’s report is hard to get exactly right because of the size of the survey but the consensus is for a break-even to slightly better payrolls number.

The key point to get out of this report is that today’s data is likely to show that the U.S. economy stopped losing jobs in December. Based on this premise, economists are looking for December Non-Farm Payrolls to rise by 10,000. The unemployment rate is expected to rise to 10.1% from 10.0%.

Because of the wide range of guesses and the large margin of error, payroll growth could be zero but the margin of error is +75,000 to -75,000. The size of this margin of error is likely to trigger volatile trading conditions following the release of the report.

November’s non-farm payrolls report showed the smallest decline since the start of the recession. The number came very close to being positive; traders are hoping this report finally shows positive growth.

Initial claims reports over the past few weeks have shown a general improvement. This news coupled with other rising employment indices, points toward an improvement in the jobs picture. The negative to consider is the decrease in ADP December private jobs data. This report could be offset if there is an increase in government jobs.

A lower payrolls report will weaken the Dollar. The strength of yesterday’s market is an indication that traders are pricing in a good payrolls number. If it comes out below the consensus then look for the Dollar to retreat.

If the report is close to the consensus, the market is likely to rally, then settle into a range or weaken into the close. This will be because traders have already priced in this number.

A strong non-farm payrolls number will help the Dollar. Traders have been buying the Dollar in anticipation of a strengthening economy. A much better than expected number should help increase demand for the Dollar.

The EUR USD traded lower following the news that the Euro Zone unemployment rate reached 10% in November. This was the highest level since the Euro was introduced. The penetration of the retracement zone at 1.4350 to 1.4319 is a sign of weakness. Regaining this area is bullish.

The GBP USD is still trying to establish support inside a retracement zone at 1.6036 to 1.5988. Uncertainty over the upcoming general election is putting pressure on the British Pound. Concerns remain over the budget and other fiscal issues.

Technically, the USD JPY should remain strong as long it remains over 93.13. The next upside objective is 95.09. Yesterday’s bearish comments from Japan’s new Finance Minister and an improving U.S. economy should continue to help this currency pair rise.

The stronger Dollar is helping to pressure the Swiss Franc. Based on the short-term range of 1.0507 to 1.0242, traders should look for a minimum retracement to 1.0374 – 1.0406. Last night the market regained the lower end of this retracement zone. Holding 1.0374 sets the market up for a rally to the next target at 1.0406.

The USD CAD is up slightly overnight. A bullish employment report could help launch a rally to 1.0517 – 1.0571 over the near-term. Weaker gold and crude oil prices will continue to underpin the market.

The AUD USD is trading weaker. Technically, the Aussie Dollar posted a daily closing price reversal top yesterday which should start a 2 – 3 day break back to .8999 to .8937.

The NZD USD is under pressure overnight. Technically, Thursday’s closing price reversal top should trigger a 2 to 3 day break to .7198 to .7145.

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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