NEW YORK (Forex News Now) – Daily Market Overview – The U.S. Dollar turned in a mixed performance on Thursday, dropping sharply against the Euro after the ECB left rates unchanged at 1.0% and ECB President Jean Claude Trichet made hawkish comments after the rate release, according to the daily forex news. An intraday EURUSD analysis showed the Euro rallied up to 1.3965 from the 1.3833 level right after the statements.
The U.S. Dollar was otherwise resilient against the other major currencies, rising sharply against the Japanese Yen, Swiss Franc and New Zealand Dollar, while rising marginally against Sterling, and the Australian and Canadian Dollars. USD news had the Greenback gaining ground on the back of a positive Initial Jobless Claims number, which dropped below the 400K level for the first time since 2008.
Elsewhere, the price of gold reacted sharply to economic developments and signs of a strengthening U.S. economy, dropping correctively from the all time high of $1,440.30 seen on Wednesday, to the $1,410 level before resuming its uptrend. The price of oil remained firm however, trading above the psychologically important $100 per barrel level and heading for its third consecutive weekly gain.
March 3rd Important Economic Developments:
- ECB Leaves Rates Unchanged – The European Central Bank released its Rate Decision and ECB President Trichet held an associated Press Conference today. The central bank kept its benchmark Minimum Bid Rate steady at the 1.00% level. Trichet created a stir by stating that, “strong vigilance is warranted with a view to containing upside risks to price stability.” The first two words in this quote had been used in the past to signal an impending rate rise, prompting EURUSD to spike 140 pips higher after the comment.
- U.S. Weekly Initial Jobless Claims – A key indicator for U.S. employment ahead of Friday’s key Employment Report, Weekly Initial Jobless Claims came out at their lowest level since June 2008. The result was considerably below expectations at 368K versus the 394K anticipated and last week’s 391K print that was revised lower to 388K. The lower than expected number boosted the Greenback versus the Swissy and Yen, but the Euro rallied on Trichet’s comments.
- U.K. Services PMI Weakens – Markit released the results of its diffusion index based on a survey of purchasing managers in the services industry. Although above the key 50 level at 52.6, the Services PMI result disappointed a market that was looking for 53.8 after last month’s 54.5 print.
- Swiss Retail Sales Disappoints – Retail Sales in Switzerland came out down -2.6% versus the expected rise of + 1.7% after last month’s slight drop of -0.8% that was revised down from -0.4%. The lower than expected result for this important Swiss number prompted USDCHF to rise sharply.
- Australian Building Approvals and Trade Balance Mixed – Australian Building Approvals was off by a disappointing -15.9% last month versus the expected drop of -3.1%. This large drop was offset slightly by an upward revision of last month’s rise of +8.7% to 10.0%. Also, the Australian Trade Balance showed a higher surplus of +1.88B compared with the expected +1.53B result, and last month’s result was revised a bit higher to +2.02B from +1.98B.
March 4th Forex Events for Traders to Watch
- U.S. Employment Report – The U.S. Bureau of Labor Statistics will release its key indicators for U.S. employment today. These include Non-Farm Payrolls (NFP) that is expected to rise to 191K from last month’s 36K, the U.S. Unemployment Rate that is expected to rise to 9.1% from 9.0%, and Average Hourly Earnings that is expected to rise by -0.2% compared with the previous +0.4% gain. A higher than expected NFP number tends to boost the Greenback, and given the volatile trading conditions often surrounding this number, purchasing a EUR Put/USD Call binary option ahead of it could offer a limited risk way of betting on a better than expected result.
- EU Economic Summit – European Union leaders are due to meet in Helsinki today to discuss the EZ debt crisis.
- Canadian Ivey PMI – The Richard Ivey School of Business will release its closely watched diffusion index based on a survey of Canadian purchasing managers. The number is expected to rise over the key 50 level to 50.6 this month, compared with the 41.4 result seen previously.
- U.K. Halifax HPI – The Halifax Bank of Scotland is expected to release its House Price Index (HPI) that measures the change in the price of homes it finances. This leading indicator of health for the housing sector is expected to drop by -0.6% compared with last month’s rise of +0.8%. A lower than expected result will tend to hurt Sterling.
- Increasing Tensions in the Middle East – The rebellion in Libya persists and has spread to Iran. The forex market will be watching how the price of gold and oil responds to developments in affected countries.