Daily Fundementals -The US ADP Change in Nonfarm Payrolls

[B]Economic News


The US centric trading week continued yesterday, as both the European and Japanese markets were closed. The biggest news that was released was the ISM Manufacturing Index that came in a stronger than expected (54.7), and the ISM Prices which soared to 73.0. The high figures pushed the greenback up, and provided some hope in the heart of many traders that this might be the first drop of a positive US news rain-fall.

There are two major events expected today and tomorrow which may provide an indication of the Non-Farm Payrolls report, due out on Friday. The first one is the ADP Non-Farm Employment Change which Measures the number of new jobs created in the previous month, excluding the farming industry. ADP claims that this indicator has predictive value in regard to official statistics, but it hasn’t yet gained acclaim from traders due to its short history. The correlation between the ADP and the NFP will continue to be argued until traders will see some empiric results as time goes by. The figure is expected to be released at 13:15 GMT and the consensus is around 107K with a previous release of 106K. The second event is the US Nonfarm Productivity release which is due tomorrow 13:30 GMT and is also expected to provide further information as to how high the NFP will come. Although the figures are not expected to come high, there is a certain feeling that the reversal move is very close, and that the Greenback may break through the weak levels it has been in for a long time.


Yesterday, the majority of price action of Euro-Zone currencies came from US news events as the European market was closed. The only meaningful news came from the UK in the form of the Manufacturing PMI. The PMI came in more or less inline with expectations at 53.9. That didn’t stop the GBP to drop against the USD due to strong figures coming from the US.

As for today there are several news events with medium importance expected for release. The German Manufacturing PMI (8:55 GMT) is expected to come in at 57.0 after a previous figure of 56.9. The Euro-Zone Manufacturing PMI will be released at 9:00 GMT with a consensus of 55.5 and a previous release of 55.4. The UK Construction PMI is also expected to be released today at 9:30 GMT and is widely expected to come in at 59.0. if we see moderately weak figures coming from the European markets, that might confirm the notion that the EUR has reached the local limit, and it is now time for either a correction, or a complete reversal move.


Most Japanese traders are out of the market due to Golden week. Most price movement on JPY pegged currencies derive from Europe and the US. The only news event of this week that came from Japan was the monetary base which was released overnight at -12.2% after a consensus of -14.2%. The figure did not leave a mark on the market due to low liquidity and lack of players. The major releases from the US market with the NFP on top will concentrate most of the traders attention out of the JPY which is expected to continue the weakening trend, at least until Golden Week will be over.

[B]Technical News


After the 80 pip move down, the pair is consolidating around the 1.3590 levels. A bearish cross is forming on the 4 hour slow stochastic and the MACD, indicating the bias is defiantly bearish.


The pair is performing in a very similar manner to the EUR/USD, due to the USD strengthening effect. The RSI on the 1 hour chart indicating a strong momentum down, supported by moderately bearish dailies. Target price is 1.9900.


The daily studies are very bullish yet are overshadowed by highly overbought hourlies. With an overall bullish sentiment, a preferable strategy might be to buy on dips. Target price is around 120.50.


After touching the 1.2000 level last week, the pair is bouncing back to bullish territories. If the 1.2150 barrier will be broken than a further move up will take the pair to the 1.2240 area, and will open more room to run even further up. It is a favorable time to be long on the USD/CHF.

[B]The Wild Card


After peaking to an unbelievable high with no justified reason, the pair is now floating around 0.7377. There is a distinct bearish pattern forming on the 4 hour chart, and it looks as if it is going to be more than just a correction. This provides Forex traders with the opportunity to get in a down trend that would be perfect for position traders, and swingers.