Mercaforex , Psychology Of The Mark Is Fragile

[mercaforex]

By Mercaforex

USD:
The USD continued it sturdy pace against the EUR and GBP on Friday as the jobless data provided investors with additional troubling questions about the health of the U.S. economy. The Non Farm Employment Change numbers on Friday proved disappointing coming in considerably higher than forecasted. Although the official Unemployment Rate did match expectations with a figure of 9.8%, it was the jobless data carrying a minus -263K outcome that sent a shiver through the markets. The anticipated mark for the Non Farm Employment Change had been minus -179K and upon turning in a more negative result, investors had to immediately weight their risk sentiment. Clearly the psychology of the market is in a fragile state and the poor jobless reports last week acted like a cold wind.
The U.S. will release its ISM Non Manufacturing PMI reading today and it is forecasted to be 50.0. However, it must be noted that economic numbers from the States this week will be relatively tame and the currency markets will likely find themselves trading based on sentiment that carries over from last week’s results from Wall Street. Poor economic releases last week certainly helped spur caution in equities as questions regarding the prospects for a strong recovery have come under greater doubt. This leaves the USD within a realm that could see its value defined by a risk appetite mode this week. The greenback remains a currency that corporations, various international central banks, and individuals gravitate towards when concerns about their ‘foreign holdings’ register questions. Thus, it remains likely that the USD will continue to mirror the gyrations from U.S. equity markets – meaning if Wall Street is weak the greenback will be stronger and vice versa.

EUR:
The EUR traded lower on Friday in dollar centric action. There was little economic data from the European Union going into the weekend but over the weekend Ireland did ratify the Lisbon Treaty. Also the G-7 and IMF meetings held in Istanbul on Saturday and Sunday provided rather mixed news. ECB President Trichet continued to subtly hint that the EUR is perhaps too strong for its own good, taking into consideration that the European economy is not out of the woods yet regarding its financial woes. Today Europe will issue its broad Retails Sales, Final Services PMI, and the Sentix Investor Confidence numbers. The data produced last week from the continent was less than inspiring and like the economic figures of its international counterparts has set the groundwork among some investors - that if a recovery does come it will be sluggish at best. The EUR traded under pressure most of last week, but is still maintaining the upper reaches of its range against the USD meaning that it is at an important juncture.

GBP:
Downward momentum continued to take a toll on the Sterling Friday as it toyed with the lower side of its range against the USD. The economic data from the U.K. did not bolster investment confidence as the Nationwide HPI came in with a result of 0.9%, only a fraction above the 0.8% estimate. Also the Construction PMI reading was published and produced a mark of 46.7, which was below the forecast of 48.2 and importantly below last month’s total. The U.K. will release its Services PMI numbers today and it is anticipated to be 54.6. The U.K. finds itself in the midst of an economic storm as its political leadership is coming under increasing heat. This week the Bank of England will release its monthly interest rate barometer and though no change is expected, investors will continue to look for any changes to monetary policy coming via quantitative easing. The GBP has had a volatile path the last few trading sessions and if questions about risk appetite persist, it may continue to find a rough road.

JPY:
The JPY found a fairly tight range on Friday as risk averse trading ruled the day. Asian bourses like their counterparts continued to decline under the storm clouds created from lackluster economic data. Gold however managed to keep its value within a fairly consolidated manner as it hovered slightly above 1000.00 USD an ounce. The JPY is still very much trading near its highs and this has been propelled by investors looking for safe ground.