The currency market on Thursday saw the closing of long positions before data on the US labour market came out. The euro/dollar rose from 1.0853 to 1.0972 (+120 points) This euro/dollar growth was expected since the dollar had strengthened significantly against the pound and Aussie dollar the three days prior.
Pressure on the rate came from US service sector data and initial unemployment benefit applications. Markit’s business activity index fell from 53.2 to 49.7; below the key marker of 50. ISM’s index fell from 53.5 to 53.4. The employment index fell from 52.1 to 49.7 which is key before the NFP.
Initial unemployment benefit applications in the US for the week stood at 278k (forecasted: 272k, previous: 272k).
Main news of the day (EET):
- 15:30, US NFP and changes in hourly wages for February. Simultaneously, the US and Canada will be releasing their Trading Balances for February;
- 17:00, Canadian Ivey PMI for February.
The key event for Friday is the NFP.
- Intraday target maximum: n/a, minimum: n/a, close: n/a;
- Intraday volatility for last 10 weeks: 103 points (4 figures).
The euro/dollar rose to the U3 and stopped at the 130th Gann gradient. At 6:32 EET, the euro/dollar was trading at 1.0945. If we look at the daily, we see that the euro has reached a strong support zone: 1.0985-1.0990. If the NFP comes out above 220k, the euro will return to 1.0855. If it’s lower then we should expect a rise to 1.10550-1.1070. Any higher is anyone’s guess since the ECB is meeting on 10th March and it is expected that they will drop their deposit rate.
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My expectations for the cross came off in full. The euro/pound returned to the trend and balance line. I think that the price will remain under the trend until the NFP is out.
On Thursday the euro/dollar saw the closure of short positions and a restoral of the price to the LB. The indicators are continuing to show a rise in the pair but the NFP will have the last say.
After yesterday’s strengthening of the euro, the weekly is seeing an inverted candle form on it. Let’s wait and see what the NFP and the close of the week brings.