Rational FX: All eyes on US unemployment rate today at 13:30 [04/02/2011]

Rational FX: All eyes on US unemployment rate today at 13:30 [04/02/2011]
Currencies
High
Low
Support
Resistance
GBP/EUR
1.1849
1.1725
1.1748
1.1940
GBP/USD
1.6279
1.6124
1.6010
1.6250
EUR/USD
1.3827
1.3421
1.3512
1.3764

Yesterday’s Market Movers
  • Yesterday EU had the European Purchasing Managers Index for the service sector in January, which surpassed the previous and expectation to a 5-month high at 55.9. However, because the figure has been above the key figure 50 for a while and has no direct influence on GDP, it failed to reinforce the Euro.
  • UK PMI service also came out in the morning. We saw an 8-month high in 54.4 from the previous 49.1. Given the positive PMI Manufacturing and PMI Construction, this figure is another evidence for the economy growth. The GBP/USD hiked up to 1.6279, the highest level since the beginning of November last year. Sterling against euro therefore broke the 1.18 level and subsequently reaching a 2-week high in 1.1850 in the afternoon.
  • Initial and continuing jobless claims from the US came out better, giving a positive indication for the nonfarm payroll together with the good ADP employment figure. US Dollar found support afterwards, gaining back from the major currencies, and adjusted GBP/USD and EUR/USD back to 1.61 level and 1.36 level respectively.
  • The ultimate market movers actually came from the ECB Interest Rate Decision and more importantly, Trichet’s dovish speech in the afternoon. The interest rate was affirmed to be “appropriate” at current levels considering the inflationary pressures are “contained”.

Today’s Market Movers

  • Trichet will talk about the bond buying program and “flexible urgent structural reforms” today. We would like to see if he is opting to speak in line with the last press conference or disappoint the hawks and Euros.
  • Only data we will have today is from the US. Nonfarm payroll is expected to raise from 103K to 121K, being supported by the Initial jobless claims from yesterday. However, the Unemployment rate is predicted to dip from 9.5% to 9.4%. All eyes will be on them at 130pm today to see if US Dollar is going to gain back its position from last week or not.
We wish you a very nice day.

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