First I’d like to start things off by addressing a question that many of you have been asking. That question is:
Where are the friggin PDFs?
Yes, it’s true. The PDFs are gone….for now. With all the new content we’ve added, we haven’t had a chance to make a new PDF. We are working very hard on it and I’ll make a loud announcement when it’s up again. Thanks for your patience BabyPippers. You rock!
And now for today’s Forex trading action…
Well the ECB raised rates as expected. The BOE held rates as expected. No aggressive statements were made, and the Dollar made another small push. If you look at today’s action in the majors and compare it with yesterday’s action you would see a mirror image of movement. The majors moved almost exactly the same way they did yesterday which tells me that the traders are waiting in anticipation for tomorrow’s NFP report.
While the ADP employment index yesterday showed it’s largest gain since June, it’s still not indicative of the NFP report tomorrow. If tomorrow’s report is good, then I believe it will give the markets enough reason to buy the dollar in the short term and we may see more profit taking.. Long term however, I still don’t think a strong labor market can counteract the rest of the struggling US economy, and I think we’ll continue to see the dollar sell off. Me and Pip Diddy have had fist fights over this (he has a black eye now) because he believes the Fed won’t cut rates until late next year while I believe a rate cut will be made early in Q2.
The reason I believe this is because even if the job market is strong, I think consumer spending will still be cut back after the holiday season. It’s no doubt that consumer spending will spike during this holiday season but afterwards, I think we’ll see a screeching halt. And what do you think the average consumer is buying their christmas gifts with? Their savings? HAHAHA…no way Jose. Americans have this thing they like to use called a credit card and my intuition is telling me that this little plastic card will be responsible for most of the holiday purchases. Normally, while real estate prices were booming, people would consolidate their credit and put it on their equity line and continue to spend spend spend. Now that house prices are in the sewer, consumers will no longer have that luxury. Spending will halt, GDP will drop, and the Fed will cut rates. Take that Pip Diddy!
Ok so that’s my 2 cents on that for now. I may have to put my foot in my mouth if I’m wrong but this is how I see the market at this point in time. Booyah!
German Trade Balance
2:00 am ET; 7:00 GMT
Previous= 15.6B; Forecast= 14.9B
German Industrial Production
6:00 am ET; 11:00 GMT
Previous= -0.3%; Forecast= 0.5%
US Non Farm Payroll
8:30 am ET; 13:30 GMT
Previous= 92k; Forecast= 125k
US Unemployment Rate
8:30 am ET; 13:30 GMT
Previous= 4.4%; Forecast= 4.6%
US Average Hourly Wages
8:30 am ET; 13:30 GMT
Previous= 0.4%; Forecast= 0.3%
US Consumer Sentiment
10:00 am ET; 15:00 GMT
Previous= 92.1; Forecast= 92.0
Yikes! If you look at today’s trading range it would put you to sleep. The EUR/USD is waiting for tomorrow’s NFP report. Technicals actually show that the pair might rise since it is near short term support at its 4 hr. 50 SMA. Daily stochastics is still overbought so on the other hand, the pair also looks like it could drop to 3200. The direction of the EUR/USD will all depend on tomorrow’s fundamental reports.
I should probably start trading the Cable more often because I seem to know this pair like the back of my bling covered hand. Like I said it would yesterda, the Cable made another run to 9600 and now it’s resting on top of its 50 SMA on the 4 hr. chart. Stochastics on the daily chart still show room for selling as it is now heading out of overbought territory. Again, I’m getting conflicting signals. Short term I see the pair moving up. Medium term, there is still room for selling. If the pair does continue to drop, look for the next target to be 9460, which is the 38% Fib retracement line on the daily chart. If the pair moves up, I don’t think it will break 9800 unless the NFP is realllly bad.
My crystal ball must’ve been foggy yesterday because the Swissy didn’t quite hit 2000 like I thought it would. It was a very light trading day today and there just wasn’t enough juice to get it moving. Short term resistance is still at 2000 where the 50 SMA is on the 4 hr. chart. Daily stochastics is moving upwards out of the oversold territory and if the pair breaks 2000, the next resistance level would be around 2130. 2130 is where the 100 SMA on the 4hr. chart is headed and it’s also where the 38% Fib retracement level is on the daily chart.
The Yen still hasn’t hit 115.50 because it’s being stubborn. It still looks like it could get there but if it doesn’t hit by the time NFP comes out tomorrow then it’s time to scrap that idea and move on. 115.50 is short term resistance since that is where the 50 SMA is on the 4 hr. chart. 116.00 is the longer term resistance because that is where the 200 SMA is on the daily chart, and it’s also where the 100 SMA on the 4 hr. chart seems to be heading. Daily stochastics is heading up and so is the 4 hr. stochastics. Look for a little more upward movement overnight and then after that we’ll have to wait and see what the fundamentals dish out.
Dun Dun Dun! NFP is tomorrow. We haven’t seen much action this week so I think tomorrow could get pretty crazy. Have a happy trading Friday!