Solid Jobless Numbers Stun The Markets


Master Trader
Jun 7, 2009
By Mercaforex

The USD gained against the major currencies on Friday in a rapid push as the combined jobless numbers provided investors with a better than anticipated outcome. Both the Non Farm Employment Change and Official Unemployment Rate statistics from the U.S. fueled optimism for a recovery within the American economy. The Non Farm figures produced a minus -11K result compared to the estimated decline of -119K. The Unemployment Rate dropped to 10.0%, bettering the forecast of 10.2%. These numbers almost instantly took the USD stronger as investors perhaps started guessing that the Federal Reserve may have some ammunition to consider an interest rate hike in the mid-term. Also Factory Order numbers from the States turned in a climb of 0.6% compared to the expectation of 0.1%.
As the USD continued to pick up steam as Friday came to an end, the U.S. equity markets began to turn in mixed results. Data from the States will be rather light until the later stages of this week. Ben Bernanke is scheduled to speak today but his comments should be rather muted. Tomorrow there will be no major economic data. Thus, investors will continue to focus in on the jobless data and try to decipher its results taking into consideration that traditionally the employment picture is a bit stronger this time of the year in America as companies tend to hire to meet consumer demand for products and services. Even with the USD’s move on Friday, the greenback remains at the weaker side of its range against the EUR and JPY and finds itself in the midst of a well practiced trading pattern with the Sterling. Investors will gear themselves towards news from the retail sector this week and any murmurs from officials who undertake discussions about the economy. Traders will look to see if the USD can turn in two good performances in a row against its counterparts today.

Without any major economic data from Europe on Friday, the EUR found itself in a heavy dollar centric move and traded lower against the USD. The good jobless data from the States sent a shiver through all the markets but the EUR still finds itself at the higher part of its range against the USD. The question is if the EUR can find its footing today. As pointed out before, a weaker EUR would actually benefit Germany’s export companies. Friday may prove to be a one day wonder and traders will be keen to see how sentiment plays out this morning. ECB President Trichet is scheduled to speak in Brussels today and German Factory Orders will released and is expecting a gain of 0.6%. Tomorrow the German Industrial Production figures are on the calendar. The EUR has enjoyed a strong trend against the USD since March and this has coincided with a rally in the equity markets internationally. EUR traders will have to pay particularly close attention to market gyrations today.

The Sterling fell like its counterparts against the USD on Friday, there was little economic data from the U.K. and there will be none today of significance. Tomorrow the Halifax HPI is tentatively scheduled, but because the Bank of England will be releasing their interest rate and monetary policy decision on Thursday, we may see another delay. News of keen interest to investors in the U.K. and GBP will be developments that filter into the public sphere regarding rumors that Alistair Darling is said to be seeking a new tax format on the financial sector. The Sterling finds itself in the middle of its range against the USD after Friday’s declines and traders with the stamina to test its volatile waters could find opportunity today.

The JPY experienced whipsaw trading on Friday as the surprise result in the American jobless numbers created a wave of quick movement. The JPY has traded weaker the past few sessions against the greenback but still is solidly within the stronger side of its realm against the USD. Gold traded significantly lower on Friday as the USD found momentum. Gold is now around the 1143.00 USD an ounce and showing that it is at the mercy of a speculative market.

Here Comes The Dollar! There Goes Gold!

Friday as expected was quite volatile. With nonfarm payrolls hitting the wires, and traders already jittery we broke both the previous day’s highs and lows. Thus Friday’s recommendation continues to ring true! “We spiked up on the Thursday’s open only to close at the day lows, 18 points from the high! Even though we made a new high, this market was definitely weak, and as I have said over the last week, there is a lot of indecision amongst investors. Even though one might have been able to sense the weakness in this market on Wednesday the only way I am venturing into this market is on the 5 minute chart. The risk and volatility is very high allowing quick entry and exit for nice profits. It’s like being a ninja: Sneaking in, attacking, and sneaking away without anyone knowing you were there! However, you have to trade properly and wait for the right opportunity otherwise you end up getting in and out constantly never really being able to hold onto significant profits because the market keeps churning you up and down.” Support 1096.5, 1084.9, 1076.6, 1068.9 Resistance 1099.1, 1103.4, 1119.13, 1153.8

After Non farm came out on Friday, Gold tripped and fell down 65 flights of stairs (read dollars!)! What a tumble. The market had been feeling toppy and I was waiting confirmation for a sell, and wow did it confirm! On a five minute chart we can see how initially we came off just after payrolls, and after sliding about $25 it looked like we had settled, and might even rally. BUT look at those selling tails, one two three FOUR, followed by weak candles. This market was going lower; the buyers were not able to keep it propped up. The great sell was around 1194 on its final attempt to rally, just after the previous doji. Small risk, great potential. And if you just had the patience to hold onto it for a few hours, then you could have booked $30-40 profit! I sold 1190.90 and bought 1175, resold 1172 and bought 1150.5. Partly because it looked overdone, partly because I was satisfied with the trade, and partly because I just wanted to go home after trading all day long on Friday! Those short term trade setups we had discussed last week came into play here. Consolidation, failure to make new highs, selling tails, plus a market that had been begging for a selloff for about 10 days! Support 1147, 1136.9, 1122.82, 1100.3, 1070.6, 1024 Resistance 1163.2, 116628, 1176.2, 1185.4, 1195.7, 1201.68, 1206.65, 1217.1, 1226.6…

While Gold sold off, and the dollar soared, the Pound just slowly did exactly what we expected it to. It came off. Staying within the wide limits of its trading channel. Keep trading the channel. Be on the lookout for further dollar strength, or a very likely retracement. I have been suggesting the dollar will bottom out for some time now, but even with this move I would be cautious playing the relative currency pairs. Support and resistance remain the same. Support 1.6379, 1.6249, 1.6119 Resistance 1.6461, 1.6590, 1.6743, 1.6876, 1.7042

All I want to say about the Euro is notice the rectangular highlighted area. What do you see? Buying tails. Even though we traded much lower, it was obvious based on the action of the other currency pairs, we still always near support and bounce off. There are some buyers in this currency who are trying to keep it from breaking below 1.4800. Meaning, there is some really value around that price. So be cautious. This could be a great place to get long and trade up towards 1.5284. But if we fail to hold 1.4800 support, then look out below. It will probably mean that the dollar truly has found a bottom and that this “overvalued” currency is not able to continue sustaining its very long upward move. Support 1.480, 1.4683, 1.4465 Resistance 1.4918, 1.5021, 1.5145, 1.5284


Active Trader
Dec 22, 2009
Knowing the current situation of our economy is very crucial. We have to be vigilant as to secure jobs. I hope for a very soon recovery from recession.