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Forex Market Update
Published: Jun. 05 2006, 05:59 GMT
USD remains weak in Asia after Friday's US Nonfarm!
Rather quiet Asian session, but the spill-over effect from Friday's US data seems significant ahead of the European opening with not much supporting the dollar.
MAJOR HEADLINES â€“ PREVIOUS SESSION
â€¢ Change in US NonFarm payrolls May, out at 75k vs. 170k expected.
â€¢ US unemployment Rate May, out at 4.6% vs. 4.7% expected.
â€¢ US Average hourly earnings (MoM) May, out at 0.1% vs. 0.35 expected.
â€¢ US Factory Orders April, out at -1.8% vs. -2.1% expected.
â€¢ The Fed's Moskow said he expects to see inflation contained.
â€¢ Aig performance of service index May, out at 49.3 vs. a prior reading 56.3.
â€¢ Australian TD Securities Inflation (MoM) May, out at 0.3% vs. 0.4% expected.
â€¢ ANZ Job Advertisements May, out at 7.7% vs. -5.0% expected.
â€¢ Australian Company operation Profit (QoQ%) Q1, out at 0.1% vs 2.5% expected.
â€¢ Japan's Capital Spending Q1, out at 13.6% vs. 7.0% expected.
â€¢ Japan's Capital Spending incl. Software Q1, out at 13.9% vs. 7.5% expected.
THEMES TO WATCH â€“ UPCOMING SESSION
With most European markets closed today and a rather data less day in Europe we expect the ranges to be rather tight. Todayâ€™s focus is on the US ISM Non-Manufacturing for May. We saw Fridayâ€™s disappointing payroll numbers and a reading below the expected 60 for the ISM should take EURUSD out of the last weeks consolidation pattern. A break of 1.2980 should open up for a 1.3100+ target for the remainder of the week.
Also favoring the EURUSD upside break is speculation that the ECBâ€™s Trichet will today signal interest rates will rise while Fedâ€™s Chairman Bernanke will suggest a pause for U.S. borrowing costs. The two will speak today at the American Bankers Association in Washington.
Note: the support/resistance levels used in the matrixâ€™s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur
EURUSD (1.2945 @ 05:05 GMT)
Weekly update 04-06-2006
: EURUSD remains congested after last weekâ€™s sideways consolidation pattern. But the strong close Friday gives reason to believe that a retest of 1.2980 resistance, is in the making. We look for a break of the mentioned level this week to confirm the bullish bias and suggest a target of 1.3175 further out. For the downside only a break of the 1.2660-1.2685 support area would give reason for a more meaningful downside correction.
Monday: Still caught in the consolidation range of 1.2980-1.2685, but we favor the bullish bias with the pairs strong Friday close. look to buy dips or place an order to buy the break of 1.2980 for a 1.3050 target in today's session. look for the pair to be supported in the 1.2880-1.2915 area.
05 Jun 06
British Pound/US Dollar
GBPUSD (1.8844 @ 05:05 GMT)
Weekly update 04-06-2006: GBPUSD recovered Friday on the weaker dollar to make a strong close, but remains in a tight congested range. For the upcoming week we look for a break of 1.8885 which would give scope for a test of 1.9216, the top from April 2005. For the downside the pair remains well supported in the 1.8500-1.8530 area, which needs to break if a deeper downside correction is to be seen.
Monday: GBPUSD looks to be in a upside breakout mode after Friday's weaker dollar. Expect a break of 1.8870 to spark renewed buying interest to challenge the high from May at 1.9025. Intra day support is in the 1.8770-00 area.
05 Jun 06
US Dollar/Japanese Yen
USDJPY (111.55 @ 05:05 GMT)
Weekly update 04-06-2006: USDJPY fell short of testing 113.40 resistance, where a break would open up to challenge 115.50.But we look for 113.40 to cap the upside for the upcoming trading week supported by daily stochastics pointing lower. Look for a break of 111.00 this week to accelerate the downside for a test of longer term wave support at 108.75, the low from September 2005.
Monday: USDJPY consolidating in Asia after Friday's massive drop and we expect the downside to continue. Sell rallies towards 112.30 or look to place sell stop orders just below 111.00 for a 110.30 short term target.
05 Jun 06
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