advertisement Forex Markets See Trading Ranges Narrow as Traders Brace for US Jobs Report (Euro Open) Friday, 05 June 2009 05:22:18 GMT Printer Frien

Forex Markets See Trading Ranges Narrow as Traders Brace for US Jobs Report (Euro Open) Friday, 05 June 2009 05:22:18 GMT Printer Friendly | Email Article | RSS | Previous articles Previous Articles Jun 05 - Short-Term Forex Technical Outlook: NZD/USD Jun 05 - Forex Markets See Trading Ranges Narrow as Traders Brace for US Jobs Report (Euro Open) Jun 04 - Rate Decisions the First Wave, NFPs the Second (Forex Video) Jun 04 - US Dollar: US Non-Farm Payrolls (NFPs) May Determine Trend Continuation Jun 04 - Forex Markets Choppy After BOE, ECB, BOC Decisions - What Happened? Jun 04 - British Pound Forecast Turns Bearish On Sentiment Jun 04 - The ECB and BoE Rate Decisions Can Be Market Moving Without Cuts Jun 04 - Euro, British Pound in Play as Forex Markets Brace for Interest Rate Decisions (Euro Open) Jun 04 - Short-Term Forex Technical Outlook: GBP/CHF Jun 03 - Dollar Rallies as Risk Appetite Cools, But is this Just Noise? Jun 03 - US Dollar Turns Higher, BOE, ECB, BOC Rate Decisions on Thursday Set to Stoke Volatility (Forex Video) Jun 03 - Forex Technical and Fundamental Forecasts for June Jun 03 - Forex Options Show US Dollar Sentiment Extreme, Bounce Likely Jun 03 - Tech Talk 06.03.2009 Jun 03 - Short-Term Forex Technical Outlook: NZD/JPY Jun 03 - Euro Zone GDP to Confirm Economy Shrank at Record Pace in First Quarter (Euro Open) Jun 03 - Australian Dollar Surges As Economy Unexpectedly Grows in Q1 Jun 02 - Australian Dollar Still Facing Volatility from GDP (Forex Video) Jun 02 - Forex Carry Trade Correlation to CRB Index at Record Highs Jun 02 - FX Correlations (June): How Do Currencies Move In Relation To Each Other? Written by Ilya Spivak, Currency Analyst The forex market saw trading ranges narrow dramatically in the overnight session as traders looked ahead to the looming event risk of May’s US Non Farm Payrolls report to guide directional momentum. Switzerland’s Consumer Price Index and UK Producer Prices are on tap in European hours. Key Overnight Developments • Australia's Construction Sector Shrinks for Fifteenth Month in May • Euro, British Pound Ranges Narrow Ahead of US NFP Report Critical Levels The Euro consolidated in a narrow range in overnight trading, oscillating around the 1.42 level. The British Pound followed suit, confined to a narrow band above the 1.61 level. Asia Session Highlights Australia’s AiG Construction PMI rose to 46.9 in May from 36.5 in April. The reading below the 50 “boom-bust” level reveals that the sector contracted for the fifteenth consecutive month, albeit at the slowest pace in over a year. Builders have seen demand begin to stabilize after the government tripled its grants to first-time home buyers to A$21,000. Perhaps most notably, the wages component of the metric expanded for the second consecutive month, rising from 50.6 to 55.0. Higher wages are supportive of consumption, the largest component of overall economic growth, offering a bit of hope that the private-sector demand will support the economy after the government’s boost is exhausted. Australian GDP unexpectedly expanded in the first quarter but details of the report suggested that much of the result was owed to aggressive fiscal stimulus, raising concerns about the sustainability of such performance in the months ahead. Euro Session: What to Expect Switzerland’s Consumer Price Index is expected to show prices shrank at an annual pace of -0.9% in May, the third consecutive month that CPI has printed in negative territory. A survey of economists conducted by Bloomberg expects deflation will persist for the remainder of 2009 as economic growth remains subdued. Switzerland was confirmed to be in recession after GDP shrank in the six months ending in March and positive growth is not expected to return at least until the second quarter of next year. The downturn could be prolonged for substantially longer if expectations of lower prices become entrenched, encouraging consumers and businesses to wait for the best possible bargain and perpetually hold off on spending and investment. Turning to the UK, May’s Producer Price Index report is expected to reveal that the annual pace of wholesale inflation shrank -0.4%, the first time in nearly seven years. The reading implies downward pressure on consumer prices (the headline inflation gauge) in the months ahead as lower production costs are passed on via cheaper finished products. Although inflation now stands at 2.3%, a reading comfortably close to the Bank of England’s 2% target level, economists expect price growth to slip below 1% through the second half of this year. Median estimates from the bank now suggest economic growth will average 0.02% over 2010, an assumption that yields forecasts of a return to inflation above 1% in the first quarter of next year. On balance, forex traders are likely to look past the European data docket, with price action waiting for the release of the US Non Farm Payrolls report late into the session to guide directional momentum. Expectations call for payrolls to drop 520k in May as the unemployment rate surges to a 26-year high at 2.6%. Markets have viewed the health of the US economy as a proxy for that of the world at large, expecting a rebound in the largest consumer market to offer positive spillover elsewhere. To reach Ilya regarding this article or subscribe to his email distribution list, please contact him at ispivak@dailyfx.com <> Next > [ Back ]