Markets Eagerly Awaiting US Non-Farm Payrolls

The euro saw a mild upward correction during mid-day trading yesterday amid hopes that Ireland would ratify a euro-zone fiscal pact. That being said, the rally was short-lived and the EUR/USD was once again trading below 1.2400 by the afternoon session. Today, the US Non-Farm Payrolls figure is likely to be the highlight of the trading day. The all-important employment statistic has come in below expectations two-months in a row. Should today's news again disappoint, the USD could extend its recent bearish trend against the safe-haven Japanese yen to close out the week.


Economic News

USD - Disappointing US News Turns USD/JPY Bearish

While the US dollar was able to maintain its recent gains against riskier currencies like the EUR and AUD during European trading yesterday, it was not as fortunate vs. the Japanese yen. A disappointing ADP Non-Farm Employment Change figure caused the USD/JPY to drop as low as 78.54 during the afternoon session. Overall, the pair fell more than 35 pips for the day. Against the AUD, the dollar fell some 70 pips during morning trading. That being said, the AUD/USD reversed its upward trend later in the day, and was once again trading around the 0.9740 level by the afternoon session.

Today, traders will want to pay close attention to the US Non-Farm Payrolls figure, set to be released at 12:30 GMT. While analysts are predicting that the figure increased over last month's result, traders should be warned that the employment statistic is notoriously difficult to predict. The dollar could see additional losses against the JPY to close out the week if the Non-Farm figure comes in below the forecasted 151K. At the same time, should today's news come in higher than predicted, the dollar could see substantial gains throughout the rest of the day.
EUR - Positive Euro-Zone News Gives EUR Temporary Boost

The euro saw temporary gains during the first half of yesterday's trading session following the release of Greek polls that indicated gains for pro-austerity political parties ahead of elections later this month. That being said, concerns regarding the Spanish banking sector caused the common-currency to reverse its upward trend later in the day. Against the JPY, the euro advanced over 60 pips, reaching as high as 98.00, before turning downward and dropping to 97.15 by the afternoon session. Against the USD, the euro was up close to 70 pips before dropping within reach of a recent two-year low.

Today, any new announcements regarding the economic turmoil in Spain are likely to generate market volatility for euro pairs. Analysts are warning that the markets are still overwhelmingly bearish toward the euro, meaning that the currency is unlikely to see meaningful gains in the near future. Additionally, traders will also want to pay attention to the US Non-Farm Payrolls figure. Should the figure come in below expectations, investors may choose to place their funds with safe-haven assets which could lead to additional losses for the euro before markets close for the week.

AUD - Aussie Resumes Bearish Trend

The aussie was unable to sustain early morning gains against the US dollar and Japanese yen yesterday, and was once again moving downward by the afternoon session. The AUD/USD was up close to 70 pips during the first part of the day, reaching as high as 0.9759 before staging a bearish correction which brought it down to 0.9700. The AUD/JPY staged a downward correction after peaking at 76.95 and eventually fell as low as 76.10.

Today, any negative news out of the euro-zone is likely to weigh down on the AUD before markets close for the week. Furthermore, the US Non-Farm Payrolls figure has the potential to create additional risk aversion in the market place if it comes in below the expected 151K. Should the US news disappoint, the aussie could fall further against its safe-haven rivals.

Crude Oil - Risk Aversion Sends Crude Oil Tumbling

The price of crude oil fell during afternoon trading yesterday, as euro-zone worries combined with disappointing US indicators caused investors to shift their funds to safe-haven assets. In addition, decreased demand for oil was highlighted by US stockpiles, which are currently near a 22-year high. The price of crude fell as low as $86.50 a barrel, down almost $1.70 for the day.

Turning to today, the price of oil could see additional losses if the US Non-Farm Payrolls figure comes in below expectations and investors continue to shift their funds to safe-haven assets. Traders will want to pay attention to the EUR/USD. Should the pair continue its bearish trend, it may be a sign that the price of oil will go down as well.

Technical News

EUR/USD

A bullish cross on the daily chart's Slow Stochastic indicates that this pair could see an upward correction in the near future. This theory is supported by the weekly chart's Williams Percent Range, which has dropped into oversold territory. Opening long positions may be the wise choice for this pair.

GBP/USD

Long-term technical indicators are providing mixed signals for this pair. On the one hand, the weekly chart's MACD/OsMA has formed a bearish cross, meaning downward movement could occur in the coming days. That being said, the same chart's Williams Percent Range has dropped into oversold territory. Taking a wait-and-see approach may be the wise choice for this pair.

USD/JPY

While the Williams Percent Range on the weekly chart has dropped into oversold territory, most other technical indicators show this pair trading in neutral territory. Traders may want to take a wait-and-see approach, as a clearer picture is likely to present itself in the coming days.

USD/CHF

The Relative Strength Index on the daily chart has crossed over into the overbought zone, indicating that this pair could see downward movement in the near future. Furthermore, the weekly chart's MACD/OsMA has formed a bearish cross. Opening short positions may be the right move for this pair.

The Wild Card

NZD/CHF

A bearish cross on the daily chart's Slow Stochastic indicates that a downward correction could occur in the near future. This theory is supported by Williams Percent Range on the same chart, which has crossed into overbought territory. Forex traders may want to go short in their positions ahead of a possible bearish reversal.