U.S. Dollar Weakens after Lower than Expected ADP Report

The U.S. Dollar added to its already weak condition withanother break to the downside versus most major currencies after ADP reportedlower-than-expected jobs data.

The U.S. Dollar added to its already weak condition withanother break to the downside versus most major currencies after ADP reportedlower-than-expected jobs data.

Traders are reacting negatively toward the Dollar becausethe report came out on the wrong side of zero. Economists had forecast anincrease of 20,000, the actual number was reported at -39,000.

The ADP report is disappointing but not unexpected given theweakness in the economy. This report may also be suggesting the beginning of anew contraction in the jobs market.

Based on the ADP number traders are looking for a loss ofabout 10,000 jobs in this Friday’s Non-Farm Payrolls Report.

The EUR USD continued to inch toward the major Fibonacciretracement level at 1.3896 overnight. Traders should watch for profit-takingor a technical bounce if this area is tested today.

The Euro rallied following the release of the ADP report butfailed to take out the overnight high at 1.3880. This pattern suggests the paceof the rally may be slowing, but does not indicate a change in trend isimminent.

The USD JPY sold off sharply after ADP released its jobsdata. The weaker-than-expected employment number weakened the Dollar againstthe Yen because it supports the Fed’s case for additional quantitative easing.

The Dollar/Yen plunged through the “intervention bottom” at82.88, hitting stops down to 82.75. There was no sign of fresh shorting under82.88. Bearish traders are likely to take a cautious approach as this currencypair nears the psychological support level at 82.00. Some analysts haveidentified this level as the line in the sand for the Bank of Japan.

Look for light selling pressure to continue down to 82.00 astraders watch for signs of Japanese central bank activity. Bearish traders mayget a free pass during the New Yorktrading session since the BoJ last intervened during the Asian session. What isclear is no one wants to get caught short during an intervention especiallythose holding profitable positions.

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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