Good Day For Risk Management

The USD traded in range yesterday as the broad markets turned in tentative results as investors await today’s Non Farm Employment Change numbers from the States. The weekly Unemployment Claims almost hit the estimated mark head on Thursday, but the Factory Orders in the U.S. were weaker. Today’s jobless number is forecasted to be minus -101k, slightly better than the previous month’s (if job loss can be called better). Investors will be primed for any surprises, but taking into context that we are entering a holiday weekend in the States the question may become – who will be around to take advantage of the outcome?

Volumes today could be rather light and this could be reflected with not only cautious trading leading up to the release of jobless statistics, but cause some rather quick and whipsaw movement thereafter. Yesterday the ECB also got into the act and there were little surprises as President Trichet expressed his belief that the E.U. will avoid another recession. The question begs though ‘what else could he say?” The major economies all face withering pressure points regarding debt and growth and the party line from all officials worldwide will continue to be one of stability with hopes for a better tomorrow. And the question all investors ask is - can the officials be believed?

The economic data from the U.K. proved disappointing with the Nationwide HPI and Construction PMI numbers missing their respective marks. However the Sterling managed to trade in range based on the caution that is prevalent before going into today’s session with the all important jobless numbers from the States casting a shadow. The Services PMI will be released from the U.K. today, but its impact could be limited.

The JPY continues to trade in the stronger realms of its range and some officials from Japan have admitted that without help from other international central banks they may have a difficult time defending the JPY. This stems from the fact that places like the U.S. would rather have their own currency weaker to try and spark their own economy. Which brings us back to the point, that the currencies worldwide continue to be confronted by the prospects of difficult economies, and governments are being hard pressed to solve their problems at home first. The AUD finds itself on the stronger side of its narrow range and it may continue to consolidate there until its election issues show any resolve.

Today will offer traders plenty of opportunity to test the markets, but they must be cognizant that the jobless numbers, lack of volume, and a long holiday weekend in the States could cause volatility that could just as easily work against them. The most important thing to bring to the table today if trading will be ‘risk management’.

Written by: Robert Petrucci
Bforex Chief Commodity Expert and Forex Analyst
Robert@BForex.com Please contact Robert Petrucci directly with any questions or comments you may have about the analysis.
Market Analysis Disclaimer: The information and opinions expressed in these analyses are solely for general information use and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. Opinions and information contained herein are subject to change without notice. These analyses reports have been prepared without regard to the specific investment objectives, financial situation, and needs of any specific recipient. Bforex does not guarantee the accuracy or completeness of the information contained herein, even though it was obtained from sources believed to be reliable and trustworthy. Furthermore, Bforex does not assume any liability for any direct, indirect, or consequential loss as a result of any person(s) reliance on information or opinions expressed herein.