Markets pause for breath ahead of key US jobs data

Mike Paterson’s daily Forex brief

The volatility of the past few days has given way to a calm before the potential storm that is the key Non-Farm Payroll data due out today at 13.30 GMT, and in the bigger picture traders now also have to make sense of all the rhetoric leading up to the EU summit on Dec 9th.

Given all the recent press on next Friday’s key event this is either the end of the world as we know it (cue for a song) or the start of a bright new beginning. The reality is neither but that doesn’t make it any less important and influential on the markets between now and then.

Anyhow we’ve seen little real change in the last 24 hours with EURUSD sitting at 1.3480, GBPUSD at 1.5700 and AUDUSD AT 1.0253.EURGBP has also traded tightly and is at 0.8588 (GBPEUR 1.1644) having failed to break through immediate support or resistance.

There is talk this morning of the BIS (Bank for International Settlements) and ACB’s selling some EURUSD which they bought lower down, and more resistance is expected at the recent high around 1.3530.

EURCHF moved sharply higher after Europe closed yesterday on reports that the SNB will introduce negative interest rates as another tool to weaken the Swiss Franc. EURCHF rose rapidly toward 1.2400 from 1.2275 but has since settled around 1.2340. I think we are brewing up to another SNB action very soon.

Forecasts for the US NFP number come in at around +120k up from 80k last month with the unemployment rate staying around 9%. But before that we have UK Construction PMI out at 09.30.

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And a little note of interest for all you gold watchers. The Bank of Korea, which controls the world’s eighth-biggest foreign exchange reserves, has boosted its gold holdings for the second time this year amid Europe’s debt crisis. The central bank bought 15 metric tons last month, boosting holdings to 54.4 tons, which is equivalent to 0.7% of its total reserves. Gold has risen about 23 % this year, reaching an all- time high of $1,921.15 per ounce on Sept. 6th. By comparison the U.S. $, which typically moves inversely to bullion, is down about 1% this year against a basket of six major currencies. South Korea’s foreign-exchange reserves fell by $2.35 billion from October to $308.6 billion at the end of November due to the fall in EURUSD which perhaps explains why they’re all quite keen to offload their Euro’s on the rally as we’ve seen this morning.

And finally I must mention the wonderful performance by Crystal Palace in beating Man U on Wednesday night, a result pleasing many of my readers! I’d also like to point out that the “Eagles “ are managed by one Dougie Freedman who was originally a Palace player but who had to go play for the mighty Shrimpers to really learn his trade.!!!

Good luck out there today folks and have a great week-end.

Today's Data:

09.30-UK- Construction PMI

10.00-EU- Eurozone PPI

13.30-US- Non-Farm Payrolls / Unemployment Rate / Average Hourly Earnings

Interbank Rates as of 08:16 BST

Agree or disagree? Then please leave a comment in the box below or contact me by e-mail.

Mike ‘Oscar’ Paterson has been in the Forex trenches for nearly three decades working as a senior Spot trader in London at UBS, Chief Dealer FX at the State Bank of Victoria and in charge of Spot CHF at Credit Suisse with a daily turnover in excess of $1.5 billion. Mike now works as an independent consultant providing a fully bespoke service to the corporate and private sectors in physical FX delivery as well as guiding those who wish to improve their currency trading. Mike also presents seminars and workshops and writes for a number of publications.

To contact Mike please call +0044 (0) 1732 700383 or email mike.paterson@economicvoice.com

The views expressed above are those of the author and should not be taken as investment advice. MSP Foreign Exchange Services will have no liability for, or to, any persons executing trades based on the content above.

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