Wednesday June 30, 2010 - 14:41:00 GMT
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Forex Hound - www.forexhound.com
U.S. Dollar Direction Determined by ADP Report
The direction of the U.S. Dollar on Wednesday will be determined by the ADP
Employment Report. This conclusion is being supported by both fundamental and
Fundamentally, a weaker than expected report will sent demand for risky
assets plummeting while driving up the lower yielding U.S. Dollar and Japanese
Yen. How much below the consensus and how close to the low end of the range
will determine how much upside momentum will be generated for this two safe
haven markets. Pre-report guesses are for a consensus of plus 60,000 jobs. This
falls in the middle of a 23,000 to 100,000 range.
A report above the consensus will be bearish for the U.S. Dollar and fuel
demand for higher yielding assets especially the commodity-linked currencies. How
much these currencies rally will be dictated by how close to the upper end of
the range is the actual number of jobs added.
Technically, almost all of the major Forex markets are sitting on major
retracement zones. This indicates that there is balance and that the ADP report
could be the catalyst to upset this balance.
The Euro, for example is sitting on a 50% price at 1.2171. Holding this
retracement level is essential to the start of another leg up in this market, but
without a bullish ADP number, donâ€™t expect this price level to hold. Instead,
look for a possible break to 1.2102 if the report comes out bearish.
The fundamental catalyst is the same for the
Australian Dollar and New Zealand Dollar, but the price levels are different.
Holding .8469 will be bullish for the Aussie, but a bearish ADP number could
trigger a decline to .8378. The Kiwi is
approaching its retracement level at .6865.
Bad news from ADP will trigger an acceleration down to .6796
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