From a small relief rally to something more substantial?

[Eurusd Trader]

ECB President Trichet took centre stage again yesterday in his last press conference from his last Board meeting – after 8 years in a the hot seat.

He looked relaxed and more confident than what I have seen for some time. The extended bond purchasing program as well as the new 12 month lending facilities were well received

That ECB did not change interest rate – which was not a big surprise given the higher than expected inflation figure for September. But any dip in those inflation figures over the coming months will mean lower borrowing costs from ECB. It’s just a matter of one or two months.

The announcement as well as the press conference caused some nice volatility for EURUSD. Down on the rate decision and then a bit up and down throughout the first 45 minutes of the press conference.

At the end we felt a bit more comfortable and the move higher could start,

Several EU politicians were out talking comfort yesterday. The one I pay notice to is Angela Merkel. She talked warmly about capitalising the banking sector.

The total picture from these parameters was enough to lift the EURUSD – and when a few stops were taken out - then it got some speed.

Today is US jobs day – another colourful event. I have no ideas what the NFP (non-farm payroll) figures will be – but if the tiny optimism seen by two earlier US data this week was anything to go about – NFP could this time surprise to the upside.

If NFP comes out positive – then stock markets will rally at the end of this week – and EURUSD will follow.

I have mentioned 1.3635 several times this week as the lowest high for October. It’s still 200 pips away – but on a thin Friday session in NY – anything can happen.

A negative NFP could stop momentum seen yesterday and would make us finishing the week in a bit of the same mood as last Friday. Stocks would likely lose some of their gains from yesterday and so could also EURUSD.

I think such a dip would be short-lived as the more positive European outlook would outshine more depressing US employment data.

Not to forget other items from today’s calendar:

* CHF Unemployment Rate 05:45 2.80% 2.80%
* CHF Unemployment Rate s.a. 05:45 3.00% 3.00%
* EUR German Industrial Production n.s.a. and w.d.a. (YoY) 10:00 6.40% 10.10%
* EUR German Industrial Production s.a. (MoM) 10:00 -2.00% 4.00%
* USD Change in Non-farm Payrolls 12:30 50K 0K
* USD Change in Private Payrolls 12:30 90K 17K
* USD Change in Manufacturing Payrolls 12:30 -3K -3K
* USD Unemployment Rate 12:30 9.10% 9.10%
* Average Hourly Earning (MoM) 12:30 0.20% -0.10%
* Average Hourly Earning (YoY) 12:30 1.90% 1.90%
* USD Wholesale Inventories 14:00 0.60% 0.80%
* USD Consumer Credit 19:00 $7.500B $11.965B

(time GMT, consensus, previous)


To wrap it up: The NFP figure sets the mood for the end of the week. On release you will see volatility likely in the range of +/- 100 pips for EURUSD i if the figure is far from consensus.

The trend after release is one as set out above.

I will likely not be very exposed leading up to jobs data – but I buy on any dips for the medium term outlook of 1.3635. That outlook is this morning more short term than medium term. NFP will decide how short.

Be cautious and Have a nice weekend.

[eyeball]

Where is your technical analysis, or is that not a consideration in your view.

[Stevenfx]

So whats gonna happen now that the agreement on the new bailout plan as been released? Is it the end for the usd ?

[Enivid]

Why the end for the USD? It will probably go down against the EUR for some time, but that doesn't mean an end to the US currency.