NEW YORK (Forex News Now) – Daily Market Overview – The daily forex news reported that the U.S. Dollar fell sharply on Tuesday in response to favorable economic data out of a number of major world economies, including the United States. In addition, while the situation in Egypt continues unresolved, the geopolitical uncertainty resulting in risk aversion was largely nonexistent on Tuesday as the commodity currencies were some of the best performers.
The Greenback is trading lower, mainly on risk appetite since economic numbers out of the United States were equally favorable to the USD. The price of gold edged higher on Tuesday, as did crude oil after Monday’s sell off, contributing to the Dollar’s weakness.
The turmoil in Egypt seemed to have lost some of its influence on the markets in Tuesday’s trading with the market concentrating more on economic releases, which proved to be more positive than expected, signaling a possible global recovery.
Releases out of the Eurozone, the U.K. and the U.S. all pointed to improved economic conditions. Numbers such as the ADP Non-Farm Payrolls, out later today will give additional insight and confirmation.
February 1st Important Forex Developments:
- EUR/USD Rallies on Positive Data – Economic releases on Tuesday included the German Unemployment Change showing a drop of -13K versus 11K that was expected, and Eurozone Final Manufacturing PMI increasing to 57.3 versus the 56.9 consensus and the Eurozone Unemployment Rate holding steady at 10.0%. EUR/USD analysis shows the Euro gained sharply on Tuesday, and is trading at the 1.3844 level early Wednesday.
- Sterling Rises over 1.6000 –The U.K. also had some positive numbers which sent Sterling soaring over the 1.60 level on Tuesday. Nationwide HPI dropped -0.1% last month, versus an expected decline of -0.3%, and U.K. Manufacturing PMI came out at 62.0, a record high, versus the 58.0 consensus.
- RBA Leaves Rates at 4.75% – The Australian Dollar jumped against the Greenback after the RBA left its benchmark Cash Rate at 4.75% as was widely expected. Hawkish comments by Governor Glenn Stevens, who sees that the rebuilding of the devastated areas of Queensland “unlikely to have a major impact on inflation” sent AUD/USD firmly over parity on Tuesday. Australia is preparing for another major cyclone dubbed Yasi with evacuations presently underway. The cyclone is expected to reach the northern coast of Queensland early Thursday.
- U.S. ISM Manufacturing PMI Rises – The U.S. also had some positive economic data on Tuesday as the ISM Manufacturing PMI came out at 60.8 versus an expected 57.8 reading, with the previous number significantly revised upward from 57.0 to 58.5. The rise in manufacturing is the fastest pace in more than six years and clearly indicates improvement in the U.S. economy.
- New Zealand Dollar at 10-week Highs – An increase in exports has traders betting on a rate hike by the RBNZ of as much as 66 bps over the next year according to a Credit Suisse index based on swaps. NZD/USD is currently at 0.7804 in early Wednesday trading.
February 3rd Forex Events for Traders to Watch
- U.S. ADP Non-Farm Employment Change – While not as important as the Non-Farm Payrolls number released on Friday, this number is closely watched as a preview to the Friday number, and sometimes adds extreme volatility to the forex market. Automatic Data Processing provides payroll services to some of the largest corporations in the United States. This months ADP Non-Farm Employment Change is expected to show 148K new jobs.
- U.K. Construction PMI – This important number will affect Sterling considerably if the reading rises above 50.0 showing an expanding economy. The expected number is 49.8, with a previous reading of 49.1.
- New Zealand Employment Change and Unemployment Rate – Both very important numbers for the Kiwi, Employment Change is expected to be +0.2% versus a previous reading of +0.1%. The New Zealand Unemployment Rate is expected to climb to 6.5% versus a previous reading of 6.4%.
- Australian Trade Balance and Building Approvals and AIG Services Index – The Australian Trade Balance always impacts the AUD/USD rate and is expected to be a surplus of +1.63B versus a previous reading of +1.93B, any surprises of a larger surplus will probably take the Aussie to new highs. Also, monthly Building Approvals have considerable impact on the Aussie and are expected to be +1.4% versus a previous decline of -4.2%. Finally, the AIG Services Index had a previous reading of 46.4.
- Eurozone PPI – This indicator may influence the EUR/USD rate however, the impact on the currency is generally not as strong as German or French PPI which are released separately. This month’s release is expected to show an increase of +0.8% versus a previous +0.3%.