Jes Black

June 1, 2007 11:00 AM New York

June 1, 1:00 AM New York: Dollar majors are flat in anticipation of two very significant economic figures tomorrow at 8:30am that will make or break the case for the likelihood of Fed rate cuts going forward and determine USD direction in the medium term. Non-farm payrolls are slated to come in well above the ADP figure of 97K at 135K. Anecdotal evidence suggests that this number may be even higher. Also, the Fed?s preferred inflation measure, core PCE figure, is projected to recover from a flat 0.0% reading last month to 0.2%. Any disappointment could put the inflation rate below the 2% ceiling that has thus far demanded a hawkish FOMC policy. On the other hand, signs of a broken trend in subsiding inflation would confirm that this Fed is on hold for some time to come despite the weak economic growth seen in Q1. Projections suggest that we remain with the dollar bullish bias, and as such we will be possibly looking at a long USDCHF opportunity following the release.

Current Trades:
Short USDCAD @ 1.0680; S/L @ 1.0725 (shift to cost at 1.0665)

Confidence Rankings:
1 USDCHF: Near Term: Bullish Medium Term: Bullish
2 GBPUSD: Near Term: Bearish Medium Term: Neutral
3 USDCAD: Near Term: Bearish Medium Term: Bullish
4 USDJPY: Near Term: Bearish Medium Term: Bullish
5 AUDUSD: Near Term: Neutral Medium Term: Bullish
6 EURUSD: Near Term: Neutral Medium Term: Bearish

May 31, 2007 11:00 AM New York
USDCAD remains in the well-defined declining channel just as consistently much better than expected fundamentals in Canada forced the central bank to adopt a rather hawkish tone in Tuesday?s decision on rates. Despite a worse than expected GDP reading this morning, we see the bearish momentum as likely to continue.
Short Term: Bearish
Medium Term: Strength in commodities and recovery in Canada?s employment bodes well for the loonie in weeks to come.

Trading Blotter:
Short USDCAD @ 1.0680; S/L @ 1.0725