Darko Pavlovic Forex News
At 8:30:00 AM Unemployment (exp 5.2%, prev 4.9%) US Oct Avg Hourly Earnings (exp 0.2%, prev 0.2%) US October US Oct Avg Work Week (exp 33.9 hrs, prev 34.1 hrs) US Oct Payroll Employment (exp -262 k, prev 199) At 10:00:00 AM US Oct Factory Orders (exp -1.3%, prev 0.0%)
The dollar remains frail against the euro and the yen, as the markets wait for crucial US labor report, which is expected to show the unemployment report rate at a range of 5.1% to 5.3% from previous 4.9%, and Oct Non-farm expected at a range of -400K to - 300K, from previous -199K. Recall that the last report (September report) was based on the reference week ending on Sep 15, meaning that persons employed on September 10 were included as employed despite their loss of job later in the week. This suggests that the September report will show a stark fall in payrolls. Another bad sign is that October report will be based on the week ending October 13, when the 4-week average jumped to 493K from 467K. Consequently, anything greater than 5.2% is expected to have a great psychological impact on the market.
The euro was little changed around $0.9050 after Eurozone Purchasing Managers data showed that index fell to 42.9 in October from 45.9 in September indicating that manufacturing sector sank deeper in recession in October. The data strengthen the calls for another ECB rate cut. The next ECB meeting is on November 8 and analysts believe that the central bank will cut rates by 25 bps, although many believe that only 50 bps cut could offset the central banks inactive approach towards boosting the growth. It is likely that the euro will break 91cent if the US unemployment data came worse than expected but the question is for long the euro can sustain its gains above that level. Analysts worry that European economies are even in worse shape than the US and the ECB inactivity towards rate cuts is adding to overall depressive economic outlook. Initial resistance at 90.70 and 90.95. Support holds at 90.0, 89.80 and 89.50.
USD/JPY is trading around 121.60 yen Nikkei ended its first day in six sessions in positive territory up +36 pts to 10383. The Bank of Japan this week said the economy would contract to around 1.2% this fiscal year and fall 1.1% t next year, forecasting the worst recession in decade. The Bank is also more convinced than ever that deflation will be prolonged to at least 2003. As Japan pushes with economic reforms, the yen could strengthen vs. the dollar as markets may react positively on news that the country is trying to tackle its mounting economic problems and reward Japanese currency by pushing it below 120 levels. Finance Minister Shiokawa has already warned that: "Action may be needed if
FX rates move in the wrong direction hinting more forex interventions. The strong yen is hurting exports at a time when Japan desperately needs to boost its production, thus undermining economic reforms. It seems that the USD/JPY levels around 121.50-123.20 yen are acceptable for Japanese authorities, at least for now. Initial support is seen at 121.30 and 121. Upside capped at 121.90, 122.10 and 122.35.
Crude oil rose 1% amid expectations that if prices fall below $20 a barrel for the first time since August 1999 OPEC could further cut production. The OPEC countries are likely to reduce sales by at least 1 million barrels a day, or 4.3%, at a meeting on Nov. 14. The US, as the world' biggest consumer is already putting a pressure on demand after manufacturing fell to its lowest levels since 1991. The group of 11 OPEC nations will discuss a reduction of sales, which would be its fourth this year. EUR/USD is trading around $0.9050.
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11-02-01, 01:40 PM
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