AUD USD Strengthens on Better Jobs Data

The Australian Dollar is firming up this morning after areport showed that the economy added a greater-than-expected 33,700 jobs inApril. This is good news for the Aussie because it shows that the economy isgrowing despite six interest rate increases.

The Australian Dollar is firming up this morning after areport showed that the economy added a greater-than-expected 33,700 jobs inApril. This is good news for the Aussie because it shows that the economy isgrowing despite six interest rate increases. The pre-report estimate was for anincrease of 22,500 jobs. Prior to last night’s jobs data report many tradersfelt that the Reserve Bank of Australia’sseries of interest rate cuts were slowing down the economy. The new jobs numbermay be an indication that the economy may be able to handle another hike.

Technically, the Aussie appears to be building a supportivebottom which could trigger a further rally into a retracement zone at .9047 to.9228.

The NZD USD is trading higher overnight, partially becauseof the strength in the Australian Dollar and because of the increase in thecountry’s business main index from 56.7 to 58.9. Technically, this currencyremains rangebound between .7325 to .7007. This makes .7166 to .7203 a keyretracement zone.

Selling pressure continues to drive the EUR USD lower. Theshort-term euphoria triggered earlier in the week by the announcement of afresh bailout package from the European Union appears to have worn off.Investors feel that the new money being pumped into the economy is merely newdebt being piled on top of old debt. In addition, the market seems to like theidea of financial austerity measures rather than new debt. Earlier in the week,the Euro rallied after Spainannounced it was going to begin cutting costs.

Technically, the main trend is down on the daily chart. Thismarket remains in the strong hands of the hedge funds and large traders whocontinue to push it lower. There is so much money on the short-side of the marketthat even a $1 trillion bailout plan could not scare them out of theirpositions. There may be a technical bounce on the first test of the low at1.2518, but this is likely to attract more selling pressure.

The GBP USD is trading inside of a short-term retracementzone at 1.4763 to 1.4695, but downside momentum is building which could drivethis market even lower. Earlier in the week, the British Pound ralliedfollowing the announcement of the formation of a new government. Reality set inrather quickly shortly after this event as investors began to realize thataustere financial measures will be necessary to cut the budget deficit andreduce the sovereign debt. On Wednesday the Bank of England announced thateconomic growth will be slow over the next two years. This news is alsopressuring the British Pound.

The weaker Euro is helping to boost the USD CHF. The currentchart formation suggests that new low in the Euro will lead to a breakout tothe upside through the recent top at 1.1246. A new main bottom has been formedat 1.0923. A trade through this price will turn the main trend down.

Weakening equity markets and the fear that the problems inthe Euro Zone will slow down economic growth is helping to pressure the USDJPY. Traders seem to be shedding higher risk assets this morning drivinginvestors into the safety of the lower yielding Japanese Yen.

The USD CAD was under pressure most of the night, buttraders have been paring losses now that equity markets are beginning to showsigns of weakness. A break through the recent bottom in crude oil is alsocontributing to this morning’s turnaround. June Crude Oil is in a position tobreak sharply which could trigger a strong short-covering rally in theDollar/CAD.

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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