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Overnight Asia/Europe

• USD quiet ahead of NFP
• Technical trade in quiet volumes
• Traders sidelined

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 8:30am USD Nonfarm Employment Change -57K
• 8:30am USD Unemployment Rate 5.1%
• 8:30am USD Average Hourly Earnings m/m 0.2%
• 8:45am USD Fed Governor Kroszner Speaks
• 10:00am USD Wholesale Inventories m/m 0.4%
• 3:00pm USD Consumer Credit m/m 7.3B

Looking Ahead to Monday
All times EASTERN (-5 GMT)
• 10:00am USD Pending Home Sales m/m -1.0%

Summary
The USD is mixed to start New York; overnight action was subdued with ranges modest as traders get ready for the NFP report due out shortly. The majors remained inside established ranges quietly trading from technical support to resistance with a wary eye to close-in stops. Although none of the pairs ventured into the area of potential stops analysts remind that there is option expiries, fib retracements, trend line S/R and pivot points all within a few pips of this week’s highs and lows; should the NFP surprise one way or the other this morning the USD could be in for a wild ride to end the week. As expected, offers were seen in both Cable and EURO into the highs overnight as well as bids into the lows as large traders took advantage of both sides. GBP had a high print in Asia at 1.9608 before offers capped the move; drifting to lows in Europe at 1.9535 before bids lifted the rate to the 1.9570 area in light trade to start New York. EURO made early highs on follow-on buying as expected for a high print at 1.5619 before offers ahead of stops said to be resting at 1.5625 capped the move leaving stops untouched for now. Lows were a respectable 1.5571 showing the bulls aren’t letting go of the market ahead of US data today. Forex Traders report large bids on the dip and so far they are being absorbed. If those offers are late shorts attempting to get in ahead of a break that would explain the close-in stops layered above the 1.5625 area. USD/JPY is firmer despite the USD weakness elsewhere; staying firm above the 106.00 handle for a high print at 106.29 but not finding stops said to be above the 106.25 area. Lows were 105.82 making for a tight range and the rate is 106.15 in early New York; the only pair higher on the day. Swissy again closed below the 100 bar MA yesterday and weakness is evident, lows at 1.0370 and the rate is near the lows at 1.0384 to start New York; traders say the rate feels “heavy” ahead of US news. In my view, the NFP will either draw aggressive selling of USD or aggressive buying—the market is set up to either quickly extend losses or reverse completely as the technical and fundamental picture both suggest a cross-roads to end the week. Order books are thin according to some desks as yesterday cleaned out a lot of positions. If NFP is down the middle the markets might do nothing but in my view that is less likely; either the short side will have a windfall today or we will be stopped out on a reversal.



EUR/USD Daily

Resistance 3: 1.5720
Resistance 2: 1.5680
Resistance 1: 1.5620/30
Latest New York: 1.5599
Support 1: 1.5500
Support 2: 1.5440/50
Support 3: 1.5390/1.5400

Comments
Rate doesn’t do much overnight; strong bids reported on dips but offers absorb suggesting a lot of “picking sides” is going on. Trichet hints at a rate hike for July; sentiment changes rapidly and a rally today will cement that view I think. Testing the weekly opening range late in the day Thursday suggests the rate will advance further on Friday; look for NFP to disappoint and add another leg higher. Rate initially lower on French name sales; Russians on the buy side. Recovery quickly suggests the rate is finally running out of offers. Hold longs and get ready to add on a recovery. Volumes light overnight traders say. Favor the long side on dips; upside bias still remains. The bottom is in my view, Overhead resistance appears firmer on the approach to the 1.5800/20 area which is a lot closer now that the sentiment is changing.

Data due Monday: All times EASTERN (-5 GMT)

2:00am EUR German Trade Balance 16.7B
4:30am EUR Sentix Investor Confidence


USD/JPY Daily

Resistance 3: 107.00
Resistance 2: 106.80
Resistance 1: 106.40/50
Latest New York: 106.25
Support 1: 105.50/60
Support 2: 105.10/20
Support 3: 104.80

Comments
Rate firms overnight but that is likely just drift; everybody waiting on NFP this morning. Offers by exporters said to be ready at the 106.30 area layered to 106.50 with option barrier at 106.50 also so the upside may be limited. Likely this rally is done near-term but the jury is out on how much a pullback will be bought; so far light bids are supporting. Stops are said to be under the 105.50 area. Expect more selling on overnight strength. Longs likely rolling stops up underneath close-in so expect volatility after NFP shortly. Look for the news to scare out the longs by active selling to end the week.

Data due Monday: All times EASTERN (-5 GMT)

1:00am JPY Leading Index m/m 18.2%
3:00am JPY Economy Watchers Current Index
7:50pm JPY Core Machinery Orders m/m -8.3%


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky

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