NEW YORK (Forex News Now) – Daily Market Overview – The U.S. Dollar turned in a mixed performance on Wednesday as reported in the daily forex news. The Greenback gained marginally against the Euro, the Yen and the Australian and New Zealand Dollars, but fell against the Canadian Dollar and Sterling. The mixed performance was due in part to favorable United States economic data, softer commodity prices and renewed concern over the situation in Egypt, which once again turned violent.
The Greenback was also supported by a measure of risk aversion in the markets and renewed sovereign worries in the Eurozone. The concerns arose due to S&P lowering Ireland’s debt rating from A to A-, along with a warning of a future downgrade. The market will be closely watching the press conference given by Jean-Claude Trichet after the ECB rate decision later today.
The price of gold traded lower on Wednesday, confining itself in a tight range and losing only six dollars per ounce to close the session at $1,334.85. Crude however, closed higher ending over the $91 per barrel level.
Economic releases on Wednesday were positive for the most part, with the exception of the New Zealand employment figures, which came out lower than expected. A slew of economic releases out later today — including the ECB Minimum Bid Rate decision and press conference — will make for a very interesting trading day.
February 2nd Important Forex Developments:
- EUR/USD Lower on ADP Non-Farm Employment Change – U.S. ADP Non-Farm Employment Change showed that the payrolls giant added 187K new jobs in January; however the previous number was revised significantly lower to 247K from 297K. Intraday analysis shows the rate dropped from the 1.3845 level, down to the 1.3787 level after the number. EUR/USD is at 1.38003 in early trading on Thursday.
- U.K. Construction PMI Propels Sterling Over 1.6200 – Cable traded as high as 1.6227 on Wednesday after news that the U.K. Construction PMI came in at 53.7, considerably better than the consensus of a 49.8 print. The number represents an expanding economy over 50 that fueled the rally in Sterling on Wednesday. GBP/USD has made yet another high of 1.6243 in early trading on Thursday.
- Kiwi Tanks After New Zealand Employment Numbers – NZD/USD lost considerable ground on Wednesday after the release of the New Zealand Employment Change showing a decline of -0.5% quarter on quarter, versus an expected increase of +0.2%, and the New Zealand Unemployment Rate, which increased from 6.4% to 6.8% in the last quarter of 2010. the market expected the rate to rise modestly to 6.5%. NZD/USD dropped from 0.7784 before the release, to 0.7714 after the news. The Kiwi is trading at 0.7726 early on Thursday.
- Aussie Steady on Trade Balance and Building Approvals – AUD/USD held steady despite an impressive Trade Balance that showed a surplus of +1.98B versus an expected +1.63B, and Building Approvals coming out at 8.7% month on month, significantly higher than the +1.6% that was expected. Another severe weather situation — Cyclone Yasi —is developing in Queensland that may be putting pressure on the Aussie.
- Renewed Unrest in Egypt – While not immediately affecting the forex and commodity markets, further violence and unrest could fuel risk aversion and send the U.S. Dollar and other safe haven currencies sharply higher.
February 3rd Forex Events for Traders to Watch
- ECB Minimum Bid Rate and Press Conference – Considering the recent events in Egypt and the downgrade of Irish debt by S&P on Wednesday, the market will be closely watching the rate decision and ECB President Trichet’s press conference afterwards. With the European economies finally beginning to show signs of recovering, it will be interesting to see if the ECB will lessen its stimulus measures.
- U.K. Services PMI – A number that will no doubt affect GBP/USD, the index is expected to come out at 51.2 from a previous level of 49.7. A higher than expected reading will most likely propel Sterling sharply higher.
- Eurozone Retail Sales – December Retail Sales for the Eurozone are expected to show an increase of +0.6%, while the previous number was upwardly revised from -0.8% to -0.6%. A strong number will put additional pressure on the ECB to hike rates to control inflation.
- U.S. ISM Non-Manufacturing PMI and Initial Jobless Claims – Both important numbers for the forex market. Any improvement over the 57.2 figure for the ISM PMI, and a lower number than the 420K Initial Jobless Claims could strengthen the U.S. Dollar.
- RBA Monetary Policy Statement – This release can add volatility to the AUD/USD rate and gives indications as to the RBA’s interest rate policy. A hawkish bias could push the Aussie to new highs.