Friday October 8, 2004 - 19:08:12 GMT
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DOLLAR WRECKED ON WEAK JOBS DATA
The USD got hammered across the board in the start of the New York session. The lower than expected Non-Farm Payroll number was the driving factor. A paltry 96K jobs were added last month which was much weaker than the 150K estimate. EUR/USD spiked from a session low of 1.2280/85 to 1.2400, and followed the upward trend settling in at a 1.2420 range down from the high of 1.2430/35. USD/JPY knifed down from 110.70/75 to 109.80/90, and continued its downward spiral throughout the day to a low of 109.25/30. GBP/USD also shot from its session lows of 1.7825/30 to 1.7945/50 right after the NFP release, meanwhile USD/CAD tested major trend line support dating back to 1976 at 1.2500. USD/JPY and JPY crosses were weaker despite new highs in crude prices also the rumor of a revaluation of the Chinese Yuan has had a negative effect on USD/JPY and JPY crosses. But, this has only been rumored so far and some believe that the Chinese government is not ready for a revaluation. Still, any talk of the revaluation has strengthened the yen and the mere fact that China is not backing off from the rumors like they have in the past; stating that they would not be bullied into revaluation by outside interference. Dollar Bears are continuing to smile as word that the Fed might rethink raising rates in Nov. due to the recent lackluster US data. The second Presidential debate is tonight and it appears that Kerry has a leg up on the President and today’s jobs figures only strengthen his position heading into the final weeks before the election. Interesting to note that there seems to be a correlation with the polls and the dollar developing. When the polls start to show Kerry leading or favored we see a sharp decline in the dollar and the reverse happens when we see President Bush leading.
Technically Speaking: We see the euro making progress to the upside now and this is showing on the dailies as well as they begin to turn up. We need to break the important mid-July high of 1.2465 before we could confirm a move to much higher levels. But, recent history has shown us that buying into the higher levels in the euro has come back to haunt many traders, so be very leery until this break occurs.
GAIN an Edge: We look to buy the break of 1.2465 with a stop in place at 1.2335, our objective will be 1.2640.
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