In the past few weeks we’ve seen decreased volatility in the market as most major currency pairs are trading in tight ranges, but the common theme throughout the week was one of a weaker USD as recent data out of the U.S. consistently disappoint expectations.
Looking forward this week, the main event will be the NFP on Friday, which is at a -100K+ estimate as temporary census hiring peaked last month. Unemployment Rate is also expected to rise at 0.1% on Friday, after already discounting hundreds of thousands of unemployed workers no longer eligible for benefits. The focus of this event will be the focus of the market this week, and market sentiment should be leaning towards a weaker USD to say the least.
However, JPY may gain on the back of better economic outlook out of Japan along with a weaker USD fundamental outlook. As a matter of fact, the market will probably remain in a very tight trading range until after NFP on Friday, as this week will be a week where risk and fundamental sentiment fight for dominance. If risk sentiment were to gain the upper hand, expect to see USD and JPY gain strength across the board as the weaker U.S. economic outlook spark another round of safe-haven movement; on the other hand, if fundamental sentiment were to lead the market, expect some recovery in the Euro, GBP, AUD, CAD, etc… as USD remain under heavy selling pressure.
The common outcome out of both scenarios is for a strong JPY. As a safe-haven currency, JPY should gain on concerns over a double-dip recession in the U.S., and with a better economic outlook (at least for the time being), JPY will also gain just as traders gearing up to dump USD. Therefore, I’d be looking to BUY JPY (SELL JPY crosses) on any significant up moves this week, early week, as the market should provide plenty of entry opportunities.
- SELL EUR/JPY on significant gains
- SELL GBP/JPY on significant gains
- SELL AUD/JPY on significant gains
- SELL USD/JPY on significant gains
Judging from recent market activities, USD has been under tremendous pressure from the series of disappointing data, despite of risk aversion sentiment… this is a strong indication that EUR/USD may take advantage of a weaker USD week and possibly make an attempt back above the 1.2500 to 1.2700. At any rate, the overall long term outlook for the Euro still remains unchanged, I’d be careful when taking long EUR/USD trades and keep my expectation (take profit) at low levels.
Furthermore, last 3 weeks of gains in AUD/USD, NZD/USD, GBP/USD, etc… have pushed these pairs to the top of their trading range. We may be looking at a possible point of reversal as USD may gain due to its safe-haven status if concerns over the U.S. recovery turn into fear of double dip recession. This NFP (nonfarm payroll) release on Friday will be a trend changing event, and we’ll analyze the market next weekend after we see how the market reacts to it on Friday.
Henry Liu
Related posts:
- Forex Market Update & Analysis – 06/01/10
- Forex Market Weekly Analysis March 22, 2010
- FOREX – NFP Nonfarm Payroll (12/04/09) and Market Analysis
- Forex Market Update & Analysis 06/07/10
- Upcoming Forex News for May 2 ~ 6, 2011
- Upcoming Forex News for May 30 ~ June 3, 2011
- Will ADP NFP Confirm Friday’s NFP? [Video & Analysis]
- Market Economic Outlook as of 10/12/09
- Upcoming Forex Tradable News – March 28 ~ April 1, 2011
- Forex News and Market Trend Wrap-up – Thanksgiving Week, Dubai World, UAE Support, JPY Strength…
{ 21 comments… read them below or add one }
I TRY TO UNDERSTAND,WHAT IS ALL ABOUT FOREX TRADING BUT SEEN TO ME,LIKE I M JUST WASTING MY PRECIOUS TIME.I NEED HINT ABOUT THE FOREX.
Sounds like you just started Forex trading, I suggest that you check out babypips.com for some basic idea on Forex trading first.
Hi Henry,
Thank you for the analisys, great work and very informative. markets were very crazy in the US today.
Take care, and good trading!
Philippe
Thank you for the information and your wonderful signals, it has so far prooved helpfull for me in this bussiness. pls dont tire out just keep going.
Henry, You are a blessing to me.Thanks a million times.
I got burnt 3 times shorting USDCAD when it reaches the top of range of 1.0420 to 1.0514. why is USD so strong against CAD?
USD is strong because it is a safe haven currency. Today happens to be a strong risk aversion day, so all funds are flowing into safety, or USD. However, I think USD/CAD will drop soon, I am also on a short but in a longer term view.
henry thanks for your analysis, please where can we expect TP?
The USD/JPY rate doesn’t move as much does it considering they’re both currencies that are used for safe haven status.
Would it be better to match a weak currency with a strong? i.e. AUD/JPY?
Yes it would. I usually look at USD/JPY as a gauge but I take trades on other JPY crosses.
Thank for the analysis
But what about Eur/US? is it good for buy or sell?
SELL for the time being, but may turn into a BUY before NFP release depending on risk sentiment Thursday Night/Friday Morning.
henry, poeple like you are not many, you are very accurate on your analysist, and you give accurate information which is very useful to me all the time.please keep it up we need this kind of information at the starting of the week so that we can prepare our self are head of time.
Hi,
Want to take part in the contest and want to win, because i need to work under your expertease.
Hello,
I receive your email on June 29 2010 but your analysis wrote for June 28. My question is, is your analysis could be addaptable for June 29? Thank you
Short answer is: Yes. This analysis should remain true until Friday, July 2, 2010 before the NFP.
You need a “Print Article” button on your pages.
Thank you Henry !! A very2 very informative analysis. I wish you could provide the analysis for this week analysis as you say it would be a changing trend news. THANKS A MILLION SIFOO !!!!
Thank you !
Thank you Henry !! A very2 very informative analysis.
That’s a good insight Henry…the jpy should win no matter what…thank you!