FOREX-DD : Forex Daily Analysis: Forex Daily Analysis

Worst Nonfarm Figure Since 2003

A big surprise in the US job report sent the USD offered across the board. EURUSD rejected just below 1.38 and USDJPY broke 113 this morning. Equities lower. Fixed income higher as yields drop.

Overnight News Bullets

SW Riksbank raises rates 25bp to 3.75% as expected.
SW Budget Balance (Aug) out at 9.6B vs. 12.4B prior.
IT Trade Balance Non-EU (Jul) out at -584M vs. -750M expected.
NO Industrial Production MoM/YoY (Jul) out at 7.8%/2.9% vs. 1.1%/1.0% expected. Prior at -4.0%/-8.6% expected.
NO Industrial Production Manufacturing MoM/YoY (Jul) out at 0.7%/5.0% vs. 0.7%/5.1% expected.
GE Industrial Production MoM/YoY (Jul) out at 0.1%/4.6% vs. 4,9%/0.9% expected. Prior at -0.2%/5.2% (revised from -0.4%/5.1%)
E-Z OECD Leading Indicators (Jul) out at 107.9 vs. 108.1 prior (revised from 108.0)
CA Unemployment Rate (Aug) out at 6.0% as expected. Net Change in Unemployment out at 23.3K vs. 18.0K expected.
US Change in Nonfarm Payrolls out at -4K vs. 100K expected. Prior at 68K (revised from 92K)
US Unemployment Rate (Aug) out at 4.6% as expected.
US Change in Manufacturing Payrolls (Aug) out at -46K vs. -10K expected. Prior at -1K (revised from -2K)
Average Hourly Earnings MoM/YoY (Aug) out at 0.3%/3.9% as expected.
US Wholesale Inventories (Jul) out at 0.2% vs. 0.4% expected. Prior at 0.3% (revised from 0.5%)
NZ PPI QoQ (2Q). Inputs out at 1.3% vs. -1.5 prior. Outputs at 1.2% vs. -0.2% prior.
JN GDP Annualized (2Q F) out at -1.2% vs. -0.7% expected. Nominal GDP at -0.2% vs. 0.0% expected.
JN GDP Deflator YoY (2Q F) out at -0.3% as expected.
JN Money Supply M2+CD YoY (Aug) out at 1.8% vs. 2.1% expected.
JN Borad Liquidity YoY (Aug) out at 1.8% vs. 2.1% expected.
JN Bank Lending incl Trusts YoY (Aug) out at 0.5% vs. 0.3% expected.
AU Home Loans (Jul) out at -4.1% vs. -2.0% expected.
JN Eco Watchers Survey (Aug): Current at 44.1 vs. 44.7 prior, Outlook at 46.4 vs. 46.7 prior.

Market

FX: USD selling off massively after the NFP – EURUSD rejected at 1.3799 and USDJPY broke 113 this morning. AUD selling off in the Asian session.

O/N Data Heat map:

EU	US	JP	UK	SZ	AU	CA	NZ	NO	SE	FR
0	-	-	0	0	-	+	+	+	+	0

Calendar

Today's Highlights:

Time (GMT)	Region	Release	Consensus
07:30	SW	Budget Balance (AUG)	Prior 12.4B
07:30	SW	Riksbank Interest Rate (SEP) – hike expected from 3.50%	3.75%
08:00	NO	Industrial Production MoM/YoY (JUL)	1.0% / 1.1%
08:00	NO	Industrial Production Manufacturing MoM/YoY (JUL)	0.7% / 5.0%
10:00	GE	Industrial Production MoM/YoY (JUL)	4.9% / 0.9%
10:00	EC	E-Z OECD Leading Indicators (JUL)	Prior 108.0
11:00	CA	Unemployment Rate (AUG)	6.0%
11:00	CA	Net Change in Employment (AUG)	18.0K
12:30	US	Change in Nonfarm Payrolls (AUG)	100K
12:30	US	Unemployment Rate (AUG)	4.6%
12:30	US	Change in Manufacturing Payrolls (AUG)	-10K
12:30	US	Average Hourly Earnings MoM/YoY (AUG)	0.3% / 3.9%
14:00	US	Wholesale Inventories (JUL)	0.4%
17:00	US	Baker Hughes U.S. Rig Counts (SEP)	Prior 1829

This and Next Week’s Highlights:

Date	Region	Release
9 Sep	NZ	New Zealand House Prices, Producer Prices Input
9 Sep	JN	A string of GDP’s, Money Supply M2, Broad Liquidity, Bank Lending, ECO Watchers Survey
9 Sep	AU	Home Loans, Investment Lending, Foreign Reserves
10 Sep	NO	A string of CPI’s, Producer Prices,
10 Sep	UK	A string of PPI’s, DCLG UK House Prices,
10 Sep	AU	Australia Manpower Survey,
10 Sep	US	Consumer Credit
10 Sep	JN	Machine Orders

What's going on?

Following the first reported contraction in the payrolls and with growing fears of an impending recession, the US Dollar slumped to a 15-year low as measured against a basket of major currencies, with yen climbing briefly up to 112.62.
Compounded with figures showing shrinking Japanese economy, the shares in Asia fell the most in more than three weeks, led by growth sensitive exporters Toyota Motor and Samsung Electronics dropping 2pct and 2.4pct respectively.

FX

EUR	USD	JPY	GBP	CHF	AUD	CAD	NZD	NOK	SEK	PLN
0	0	-	0	-	-	0	-	0	0	0

FX Trading Strategies

Pair	Supp.	Resis.	Comments
GBPUSD	2.0230	2.0324	We expect a day of range trading and correction after the big surprise in US NFP on Friday. Fundamentally, the GBP PPI could add some short-term direction in this very nervous market. Buy the break of 2.0324 bid, targeting 2.0390. Sell 2.0268 offer, targeting 2.0200- Apply 25 pip stops.

Risk warning : ForexWebTrader shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Forexwebtrader that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated.

FOREX : Foreign Exchange Market

FOREX is a word play on the term Foreign Exchange Market. It is a market for buying and selling of currencies from all over the world. Certainly, such transactions are bound to be voluminous. It is just an estimate that there are about transactions of $1.5 trillion USD on a daily basis in the FOREX. Now just compare this with the paltry $300 billion USD a day transactions for the US Treasury Bond and the $100 billion a day transactions for the US Stock Exchange.

The FOREX came into existence in 1971 when the fixed currency exchanges were abolished. Currencies no longer had fixed values after that; on the contrary, their rates (mostly taken in comparison with the USD) were fluctuating, and changed on a daily basis. Throughout the seventies and the eighties the FOREX grew steadily, showing more advancement in the later years. The market has stupendously grown from $70 billion USD a day to the staggering amount that it transacts today on a daily basis.

There are actually about five thousand trading institutions in the FOREX. These include international banks, central government banks such as the US Federal Reserve, and commercial companies and brokers for all types of foreign currency exchange. The best thing that shows the unbiased nature of the FOREX market is that it has no fixed headquarters anywhere – it operates primarily from all major cities like New York, Tokyo, London, Hong Kong, Singapore, Paris, Frankfurt, etc. One can even use the telephone or the internet to make the transactions. The major businesses at the FOREX are the buying and selling of products in other countries. Several transactions are also conducted from the currency brokers or traders who stand to make small profits with the daily fluctuations in the market.

Most of the FOREX business is centered on big banks and financial institutions, but it doesn’t mean that the FOREX is inaccessible to small investors. The recent changes in the financial regulations have effectuated this accessibility. Earlier, a minimum transaction size was required to conduct business with the FOREX. But the current rules have made it possible to break large inter-bank units into smaller bits. Each bit is worth as less as $100,000. This makes it possible to each individual investor through loans that are extended for trading, known as leverage. The ratio to control the lots is 100:1. This means, every $1000 USD will allow one to control $100,000 on the FOREX.

The benefits of trading with the FOREX are mentioned below:-

(1) Liquidity of Investments – As the FOREX is a huge market, the funds have a very high degree of liquidity. This is because of the presence of the international banks who provide their bids and carry out a large number of transactions on a daily basis. Therefore, there is always a buyer or seller for any type of currency.

(2) Highest Degree of Accessibility – The FOREX is open 24 hours a day for 5 days a week. Every Monday morning the exchange opens at Australian Standard Time and closes on Friday afternoon at New York time. Greater accessibility is provided because the transactions can be conducted from the person’s home or office.

(3) Open Market – At the FOREX, there are no secrets. All the fluctuations that occur in the market are made accessible to everyone at the same time. There is no insider trading in the FOREX.

(4) No Commission – There is no hassle of paying commission to the brokers in the FOREX. Here the brokers earn by setting up a difference between the buying price and the selling price of a currency, which is known as a spread.

It must be understood by now that for the FOREX to work effectively, the currencies must always be traded in pairs. For instance, the Japanese yen must be traded against the euro. When one kind of currency is sold, there should be another to be bought in its stead.

The profit happens because there is always mobility between the different currencies. Even if there is a miniscule change in the exchange rate, then it could mean substantial changes in the profits due to the large amount of money involved in the transactions. People are thronging to the FOREX and not any other institution due to the trust that they have in it. To add to the advantage, the market is absolutely well-advanced and uses sophisticated software for dealing out its transactions.

FOREX-DD : Forex Daily Analysis

Forex Daily Analysis - Monday, Sep 10th