The major currency pairs stabilized from a choppy morning session, prompted by the release of the March employment report. The dollar initially sold-off following the dismal data, falling to 1.5773 against the euro and 2.0049 versus the sterling - but has since recovered with much of the gloom already priced into the currency.

The March jobs report revealed a third monthly contraction in non-farm payrolls, down by 80k versus an upwardly revised decline of 76k in February - its worst reading since March 2003. The unemployment rate for March was also worst than expectations, rising to 5.1% — its highest level since 2005 and up from 4.8% a month earlier. The lackluster labor report reinforces our view for a 50-basis point rate cut from the FOMC when it meets to deliberate policy at the end of the month. The major equity bourses shrugged off the report, with the Dow Jones and Nasdaq both up slightly on the day.

Canada’s labor report revealed similar deterioration, with the unemployment rate in March climbing to 6.0% versus 5.8% a month earlier. The March employment change number fell to 14.6k, down considerably from the previous month at 43.3k.

Euro Remains Firm

The euro climbed as high as 1.5773 after the weak US jobs report, but has since settled around the 1.57-level. Eurozone reports released saw Germany’s industrial orders, which posted a 0.5% drop in February improving from the 1.5% decline previously but missing calls for an increase of 0.9%.

Economic data slated for release next week includes Q4 Eurozone GDP and the ECB monetary policy announcement. Although the Bank is largely expected to leave rates unchanged at 4.0%, we look for the ECB to maintain its hawkish bias against inflation and anticipate President Trichet to focus on containing further risks to prices in his post-meeting commentary.

EURUSD faces resistance at 1.5740 and 1.58. Additional ceilings are seen at 1.5830, backed by 1.5860 and 1.59. On the downside, support beneath 1.57 is seen at 1.5640, followed by 1.56 and 1.5570. Subsequent floors are eyed at 1.5530, backed by 1.55 and 1.5470.

MG Financial Group
http://www.mgforex.com

Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.

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FX Trading - The Dollar Dance on Jobs Friday

Jobs Friday to us is akin to Japanese Kabuki.

Kabuki (歌舞伎, kabuki?) is a form of traditional Japanese theatre. Kabuki theatre is known for the stylization of its drama and for the elaborate make-up worn by some of its performers.

Drama, makeup, and performance, all highly stylized; we can think of no better way to describe the price action in currencies on your typical Jobs Friday.

So far this year the jobs numbers haven’t been kind. The U.S. lost 17,000 jobs in January and an additional 63,000 jobs in February and a cool 80,000 in March.

In both January and February expectations for the monthly job losses were much worse than the actual number. This time around, in March, expectations were lower i.e. the job losses were more than expected.

Here’s how the dollar index behaved after the two most recent jobs reports:

January Flips and …

February Flops.

This begs the question: how will the dollar respond this time around?

Well, the dollar was whacked early - stops were taken out on the high side in the euro and pound on the "shock of the bad news." And at the time of this writing, both currencies are now lower than their initial reaction highs. The euro has held its most of its gains, but the pound is back in negative territory on the day, below where it was before the play began.

So, can we perceive any trend or correlation or kernel of knowledge from this consistently elusive price action? We can only add this:

1. Lately there has been little consistency in dollar price action relative to the jobs report.
2. Trading intraday on jobs report exposes you to major whipsaws.

Bottom line: Even if you guess right on the jobs number, it doesn’t mean you will get the trade right. And in the words of the late great Jesse Livermore, "Trading is about doing right, not being right." Jobs Friday is often a day that slams that lesson home more frequently than most.

So, what do we do now that evidence is stacking up to make US recession look more and more a like a done deal?

One suggestion might be: Buy bonds! The 30-year loves today’s job news, up a point and one-half as I pen this missive.

But, key resistance comes in at 119-20…and the buck is approaching yet another key level of its own at 7133 …

Is that the mask of Triangle Man we see in the dollar index chart? We think it is. We’ve taken the liberty of laying out Triangle Man’s typical stylized performance and this juncture in the play:

I know what many of you are thinking; that ain’t no mask; it’s lipstick on a pig!

Well, maybe. Falling jobs, falling rates, US recession, and yet stocks are moving higher as we end this meandering missive. And the music plays on

Jack Crooks Black Swan Capital
http://www.blackswantrading.com

Currency Currents is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to forex and futures should be strictly the money you can afford to risk. While every effort is made to evaluate the actual experience of subscr ibers, all performance figures must be considered hypothetical, and past results are no guarantee of future performance. Detailed disclaimer can be found at http://www.blackswantrading.com/disclaimer.html

USD’s retreat from 102.94 extends further reaching 102.61, according to the ActionForex technical team, the intraday bias is neutral: “Intraday outlook remains neutral for the moment. Below 101.49 minor support will turn intraday bias back to the downside. Further break of 98.55 support will confirm that corrective rebound from 95.77 has completed and will bring retest of this low.” On the way up, the ActionForex team affirms: “On the upside, decisive break of 103.59 resistance zone is needed to indicate underlying upside momentum is still strong. Otherwise, outlook will still remain neutral in case of mild rally.”
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Orders for manufacturing products have declined in February in Germany for the third consecutive month, according to the German Economics Ministry.

In February, manufacturing orders have declined 0.5%, disappointing the market expectations of a 0.7% increase. Orders for January have been revised to a 0.7% decline, up from the 1.5% fall previously estimated.

Foreign orders have decreased 1.1% in February, while domestic demand remained at the same level as in the previous month. Non-Euro Zone orders have fallen 1.9% while orders from the Euro Zone remained flat. Orders for durable goods have decreased 1.3%, while orders for capital goods fell 0.9%.

On the year to February, manufacturing orders have posted a 9.0% increase, following a 8.9% increase in January, revised down from the 9.5% rise initially published.
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The Euro dropped yesterday to lows at 1.5510 to recover afterwards, the odds today, according to Liviu Flesar, technical analyst at E-Forex, stand as follows: “…Then recovered during the US session and erased all its losses, closing into the 1.5670 area. Strong intra-day barrier is formed by 1.5700 so far and a break higher into the second half of the 1.57 area is needed to confirm a resume of the uptrend on a short-term basis. Such break higher would point our attention at 1.58 and above as there may occur some new tests.” On the downside, Flesar foresees: “Support is currently seen at 1.5635 backed by 1.5595 then 1.5550 and 1.5510.”
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Retail sales volume has declined in February in the countries belonging to the Euro Zone, reversing gains obtained in January, according to the latest figures released by Eurostat.

In February, Euro Zone’s retail trade decreased 0.5% from January, instead of the 0.2% increase expected by the analysts. Sales of non food products declined 0.8% on the month.

On the year, retail sales declined 0.2%, with food drinks and tobacco products posting a 0.9% fall, while non food products’ sales fell 0.4%.

Figures for January have been revised up to a 0.5% monthly increase and a 0.2% rise on the year, from the initial estimates 0.4% and -0.1% respectively.
FOREX is a serious game. Play it with the pros.
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Forex trading involves substantial risk of loss, and may not be suitable for everyone.



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Forex trading involves substantial risk of loss, and may not be suitable for everyone.

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