Canada employment numbers were much weaker with jobs falling by 82.6k after the market had been looking for a -55k print. Meanwhile the unemployment rate surged to a 6-year high at 7.7% from a previous reading of 7.2% and higher than the consensus 7.4% estimates. Looking ahead, US trade balance and import prices are due at 12:30GMT, followed by Reuters/University of Michigan sentiment at 14:00GMT.
Fundys - Canada employment numbers have just come in much weaker than expected with jobs falling by 82.6k after the market had been looking for a -55k print. Meanwhile the unemployment rate surged to a 6- year high at 7.7% from a previous reading of 7.2% and higher than the consensus 7.4% estimates. This number could have been even worse if not for the part-time jobs component which was mitigating. A relatively quiet overnight session of trade with the market seemingly content on some consolidation ahead of the US session of trade. The PBOC published their outlook for 2009 and expects global inflation to fall further, while economic sentiment is expected to remain weak. However the bank does concede that we could reach a turning point this year. Finally the PBOC appeals for the emerging market economies to have more of a voice in the international system. This weekend’s G-20 has been getting a lot of attention with an escalation in on ongoing debate between US and European officals on the appropriate approach to the financial market turmoil. While in the US the prevailing consensus has been for as much stimulus as needed, the Europeans have been favoring a more "laissez faire" approach. UK Chancellor Darling is the latest to voice his opinion stating that he wants more regulation to prevent banks from overextending themselves. On the data front the key release came in the form of Eurozone retail sales which were slightly weaker while also showing some significant downward revisions to the previous month. In Germany wholesale prices showed a yearly drop to 5.7%. Swiss February PPI data came in lower than expected to confirm the SNB’s warning of the threat of deflation. Looking ahead to the North American session of trade, US trade balance (-38.0B expected) and import prices (-13.5% expected) are due at 12:30GMT, followed by Reuters/University of Michigan sentiment (55.0 expected) at 14:00GMT.
Quant -
For information on the above tables, please visit our Guide to Morning Slices Quant section.
Techs - EUR/USD continues to extend gains after breaking and closing above the 20-day SMA on Wednesday with the market now testing and slightly exceeding the 50-Day SMA at 1.2950. The key level to watch over the coming session comes in at 1.2995 (23Feb high) with a break opening an acceleration towards 1.3095 (9Feb high). The 10-Day SMA is also just now on the verge of a positive cross with the 20-Day and worth watching for more bullish confirmation. Intraday dips should be well propped ahead of 1.2800. USD/JPY trades back into the more defined range of the past several days after a false break on Thursday and sharp upside reversal. For now, a break above 99.70 or back below 97.15 will be required for clearer directional bias. GBP/USD grinds higher into Friday to put in yet another daily higher high and higher low, but the overall scope is for a resumption of setbacks and the current move is still classed as corrective. Look to sell into rallies to the 20-Day SMA at 1.4160 today. The key level to watch below comes in at 1.3865. USD/CHF remains confined to the recent choppy range despite the latest break to fresh 2009 highs at 1.1970 on Thursday. Look for the market to trade lower into the final session of trade. Key levels to watch above and below come in at 1.1970 and 1.1800.
Flows - UK clearer and model fund demand for Cable; corporates on the offer. EU supranational bidding Eur/Gbp. Commercial offers in Usd/Jpy on rallies to 100.00. German account large bidder of Aud/Cad. Swiss bank on the offer in Eur/Chf.
Trade of the Day - Usd/Cad: (TRIGGERED AND STOPPED ON MORNING WHIPSAW) The market has stalled out since posting fresh multi-year highs by 1.3065 on Monday, with the daily chart now starting to show a potential head & shoulders top. A break back below the neckline at 1.2715 (4Mar low) would be required to confirm and open an initial pullback towards the previous triangle resistance and rising trend-line support off of the 2009 lows in the 1.2500’s, with a more likely overshoot from there to our measured move objective into the 1.2300’s. It is also worth noting that a break back below the 1.2715 neckline on Friday would also set up a bearish outside week following 4 consecutive up-weeks. Position: Short Stopped at 1.2820; Stand Aside.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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Quant section prepared by david Rodriguez, Quantitative Analyst for DailyFX.com
To contact, e-mail drodriguez@fxcm.com
Joel Kruger publishes 6 daily pieces:
“Tech Talk” – A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)
“Morning Slices” – Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes “Trade of the Day”).
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“Indicator of the Day” – A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)
“Cross Country” – A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
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Monday-Friday (between 11:30am-12:30pm EST)
“Daily Classical” – A Daily Technical Overview of the Major Currencies.
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