NEWS / Trade Policy

Dollar firms as dealers are looking for more volatility at US non-farm payrolls announcement.

By Jean-Claude Braha - ACM Senior Trader Yesterdays News and Events: The Dollar was firmed against the euro on Thursday, helped by comments from the ECB president. Mr. Trichet gave no clear indication that interest rates will rise again in the near-term. Dealers were watching for any vigilant comment which usually signals a rate increase at the following policy meeting. As widely expected ECB raised rates to 3.25%. Earlier, BoE kept interest rates unchanged at 4.75% for the 2nd month. The GbpUsd went down as many dealers were betting for another surprise. BoE made no comment, but with inflation 0.5% above the Central Bank 2% target and set for further rise; we likely could expect a rate increase nest month at 5%. Dollar held its gains in late US session as Philadelphia Federal Reserve Bank president renewed expectations of further increases in US interest rates. As volatility in the currency market has dropped so low over the past three months; traders are more than ever looking for some excitement riding events like US non-farm payrolls announcement. Eurusd was down 0.5% to 1.2687 after spotting low at 1.2672. Gbpusd, also under pressure, lost 0.6% at 1.8770. Todays Key Issues: CH September Jobless came out unchanged 3.1% unchanged. GB August Industrial Production due at 08:30 GMT expected -0.6% +0.4% vs +0.2% MoM and +0.1% to 1.1% vs +0.2% YoY. DE August Factory Orders due at 10:00 GMT expected -0.5% vs 1.8%. CA Unemployment rate due at 11:00 GMT expected unchanged at 6.5%. Are due at 12:30 GMT, US Non-farm payrolls and Unemployment rate expected 125k vs 128k and 4.7% unchanged. At 18:00 GMT Alan Greenspan speaks at an event in Calgary, Canada. US August Consumer Credit due at 19:00 GMT survey 5B vs 5.5B. The Risk Today: EURUSD was trading in tight range 1.2763 ??“ 1.2669 this week. Waiting for new directional trend; market need to break either 1.2834 high or 1.2630 low. Possible break below 1.2630 would drive the way for more weakness towards 1.2560 and ultimately 1.2450. GBPUSD was trading this week in a 1.8663 to 1.8901 range. A break of either extreme 1.8601 or 1.9144 is required to initiate the next powerful directional move. Gbpusd is keeping bearish tone with minor support at current level 1.8730. USDJPY approached 118.50 early this week at high 118.40, but couldn??™t test the trend-line resistance originating from the 1998 high. A clear break of this level is needed clear away the actual range and target 119.41. Initial support this morning comes in at 117.45, yesterday low. USDCAD is firmer following the last month bounce off 1.1086 (Sep 28). The break above 1.1222 has paved the way to 1.1308 weekly high, where a clear break would pave the way for gain towards 1.1375 and further 1.1460. Wednesday's high of 1.1308 marks the initial resistance. Pivot point and support is 1.1222, where a break down would mark the end of the up-trend. Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.2880 K 1.9144 T 119.40 S 1.2800 P 1.2834 S 1.9075 M 118.50 P 1.2625 S 1.2763 M 1.8920 S 118.30 M 1.2570 M 1.2680 1.8742 118.00 1.2537 1.2630 P 1.8713 S 117.32 M 1.2370 M 1.2560 K 1.8663 M 116.06 T 1.2287 S 1.2450 T 1.8601 K 115.56 S 1.2183 T S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot