May 05 2008
ISM Non-Manufacturing on Tap
Last Friday, the greenback continued gaining all across the board against the major currencies. The EUR/USD pair fell for the first time in six weeks below the psychological level of 1.5400, closing the trading session at the rate of 1.5380. The USD continued its bullish momentum mainly as a result of favorable economic data release during the day. By midday, the Employment data for April was released and gave traders many good reasons to buy dollars. With the figures released, the USD sharply gained 70pts against the EUR and 82pts against the JPY. As well the figures release assisted the greenback’s recovery against the GBP, closing the Cable below the rate of 1.97 by the end of the weeks trading session.
Surprisingly, The Non-farm Employment Change showed a strong rising trend in the number of employed people during April. The report showed that fewer than 20K jobs were cut in March Compared to February reading of -81K. Combining Non-farm Employment Change with the non-aggressive interest rate last week, many traders see this as an additional sign of a US economic recovery. Moreover, in April the Unemployment Rate was reduced by 0.1% to 5%.
Today, the most important data to be released from the US will be the ISM Non-Manufacturing Composite. This report will reveal to traders more information, about the activity level during April in the US, including new orders and employment. The report is forecasted to fall at a rate of 0.5% to 49.1. Although we expect this fall to weaken the USD, the direction the USD may take may be psychological and continue last week’s bullish movement. Traders should closely follow, on Wednesday, the Non-farm Productivity report which will have more information on the US non-farm sector.
In addition, Gold prices fell last week by 6% on the back of the strong greenback. Analysis forecast Gold’s bearish momentum to be unstoppable in the short term, because the strengthening of the US economy. Meanwhile, Crude Oil prices retreated last week from its all time high above the rate of 119 USD for one single barrel, to Thursday’s 16 days low of below the $110 rate. Oil’s falling trend came mainly as a result of the strong dollar combined with announcements-free week from the OPEC countries.
My Forex Blog
Please keep these excellent posts coming. Thank you.