Forex Trading TV Video Blog

Yesterday, the greenback saw over 300 pips worth of gain against the EUR, as the cross dropped from a 1.4522 level at the beginning of the trading day, down to 1.4211 - making an 11 month low. The USD also continued its appreciation vs. the GBP; however this rally did not affect the USD\JPY pair, as the USD lost about 200 pips against the JPY.

The USD rose during yesterday’s session despite some concerning data that was published from the U.S. economy. The Automatic Data Processing has announced a 33K drop forecast for the NonFarm Payrolls. However, it appears that the market has limited its reaction to the survey as it has failed to accurately estimate the actual figures over the past few months. The Revised Non-Farm Productivity and the Unemployment Claims also pointed out that the U.S economy is far from fully recovering, as the unemployed individuals in the U.S. are consistently growing, currently measured at 444K. The only good news for the USD was the better- than- forecasted result on the Non-Manufacturing Purchasing Manager’s Index that showed that the non-manufacturing industry has slightly expanded during July.

In conclusion, two factors have joined together to strongly support the USD. The first one was the poor Euro-Zone data, which is continuing to prove that the most sustained global concerns are now coming from the European nations, and not from the U.S. The second factor is what is known as the “herd effect”. The current USD bullish trend appears to be so enduring that investors are seeing potential for unlimited profits and are so anxious to join the fest that they are becoming almost oblivious to the economic indicators. In this turn of events, only a major combination of unfortunate data from the U.S., along with a series of positive signals from the Euro-Zone, could initiate a long-lasting reversal for the EUR/USD pair.

As for today, at least for one trading session, everything is prone to change. Today is the first Friday of the month, and as such, the U.S NonFarm Payrolls will be announced at 12:30 GMT. Unlike yesterday’s data, this indicator will not be overlooked by investors. This is because it is a leading indicator of consumer spending, which accounts for a majority of overall economic activity, and also because it is published much earlier than the other leading indicators, and as so, investors often plan their weekly and monthly strategies based on this survey’s result. This is why an immediate reaction to this survey’s figures will take place. Analysts have forecasted a 73K drop in the number of employed people during July, and such a result is very likely to generate a bearish impact on USD pairs. However, in case of better- than- expected figures, the USD might extend its sharp bullish rally, and in its center, the EUR/USD might drop to levels around 1.4100.

The greenback saw mixed results during yesterday’s trading session, and continued it advance against a basket of major currencies. Positive USD positions were supported by a series of events which started after the release of poor Euro-Zone fundamental data. Another help for the greenback was a drop in Oil prices as Hurricane Gustav slowly passed without causing any major damage to energy facilities in the Mexican Gulf. Yesterday, U.S. Factory Orders showed a better than expected rise of 1.3% in July, sending the EUR/USD pair to its lowest level since January at 1.4485 before tumbling even further to 1.4383. Against the JPY the USD fell 0.5% to 108.12.

The USD has continued to gain support over the last few weeks and continues to benefit from global economic worries. This is due to investors who are looking to avidly push long greenback positions rather than other currencies whose countries were further behind in terms of economic readjustment in the wake of the global credit crisis. Tomorrow the ECB and the BoE will issue separate interest-rate decisions and both are expected to keep rates on hold; This will likely contribute to more USD momentum.

Looking ahead for today, we will see a batch of US data headlined by the very important ADP Non-Farm Employment Change (NFP). Other scheduled events include: Unemployment Claims, ISM Non-Manufacturing PMI, and Crude Oil Inventories. ADP estimates the results of NFP, which measures the estimated change in the number of employed people during the previous month excluding the farming industry and government. ADP’s results are expected to be negative at -30K from a previous 9K in the last month and could halt some of the USD’s bullish momentum. It is important to note that ADP has been inaccurate for the last several months in their estimation of real NFP figures. The Unemployment Claims report, one of the most influential USD indicators, is forecasted by analysts to show a 3K decrease of jobless Americans from last weeks mark of 425K. ISM is expected to slightly decrease to 49.4 from 49.5 in the last month and will likely latch onto the previous indicators in the direction it provides for the greenback. Crude Oil Inventories is expected to remain positive and could add to the continuous bearish trend of prices. If US economic data can get through the day with no surprises, it is likely to continue to push the dollar up ahead of Friday’s big news day.