Even though the Reserve Bank of Australia (RBA) keeps the door open to implement lower borrowing-costs, signs of a strengthening labor market may encourage Governor Glenn Stevens to endorse a wait-and-see approach at the March 1 interest rate decision as the record-low interest rate continues to feed through the real economy. Nevertheless, waning confidence accompanied by slowing demand from home and abroad may drag on the labor market, and signs of a slower recovery may cap the near-term rebound in the exchange rate as it fuels bets for additional monetary support. Move stop to breakeven on remaining position once initial target is met, set reasonable limit. There was a familiar use of data dependency language that will guide the actions of the Federal Reserve. The CME Group FedWatch Tool uses 30-day Fed Fund rate prices to measure the probability of a rate change.
The NFP could provide the balm that stabilizes the market as it calms investors nerves after a volatile week.
Alfonso EsparzaSenior Currency Analyst at Market PulseAlfonso Esparza specializes in macro forex strategies for North American and major currency pairs. MarketPulse is a forex, commodities, and global indices analysis, and forex news site providing timely and accurate information on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.
The EURUSD advanced on Thursday, disregarding a bigger than expected drop in German inflation after Europe’s largest economy said its unemployment rate fell to the lowest level since reunification. Weak inflation is expected to persist throughout the Eurozone in the first half of the year, placing more pressure on the euro.
The euro’s rebound on Thursday was partly explained by a landmark employment report from Germany, which said its national unemployment rate fell to the lowest level since the country was reunified in 1990.
Technical trading helped the euro avoid another major setback after a session of heavy selling on Wednesday.
This entry was posted on Thursday, January 29th, 2015, 7:05 pm and is filed under EURUSD, Featured, Latest News.
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Given how Fed policy members themselves do not see a rapid recovery, the data is more likely to underwhelm going forward putting into question the real possibility of 4 rate hikes given how long the market had to wait for the one in December. The pair has witnessed a volatile trading week moving more than 2 percent between the high and low in the past 4 days.
If the final report misses the mark investors will look for a higher EUR as the USD will be sold off as the Fed will be less likely to hike rates in the short term.

The latest data points to a 90.5 percent the rate will remain unchanged at the next FOMC meeting on January 27.
The biggest insight that the FOMC brought was the fact that although the decision to hike was unanimous the majority policy members were not fully onboard until the last minute.
Expectations are high at more than 200,000 new jobs, but possible given the pace of the growth of employment. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends.
He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto. This trend is depicted below, and prices can be seen declining as much as 694 pips from the March 2016 high at 1.3554. While this SSI reading is not considered extreme, this positive value when taken as a contrarian signal suggests a bearish bias for the pair. Plunging consumer prices and an unexpected policy change by the Swiss National Bank forced the European Central Bank to expedite its bond buying program. Despite the recent weakness, the Reserve Bank of Australia (RBA) may largely endorse a wait-and-see approach throughout the first-half of 2016 as the employment report continues to beat market expectations. The EUR has appreciated after the muted FOMC minutes were released putting the pressure on the European Central Bank (ECB) to step up its quantitative efforts to avoid the threat of deflation.
That leaves a more contentious debate going forward as the other big topic discussed in December was inflation.
In the other end of the spectrum is Richmond Fed President Jeffrey Lacker who sees the possibility of even more than the four rate hikes forecasted by the Fed. The USD needs a solid NFP number to rise as the market has already priced in an acceptable 180,000 to 200,000 range.
All Registered Trade Marks used on this Website, whether marked as Trade Marks or not marked, are declared to belong to their respective owner(s). Most notably, this trend is held under a descending trendline, which has been created by connecting a series of wicks, which includes the April 2016 high at 1.3218. In the event of future declines, traders should look for SSI to move higher towards +2.0 or greater. Read page 8 of the Traits of Successful Traders Guide to find out [free registration required].
Economists forecast a 0.2 percent decline after consumer prices barely increased in December. The ECB announced last week it would purchase up to €1 trillion in government bonds over the next 18 months to help stimulate the Eurozone economy.

Before deciding to invest in foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. Of course for that to happen there would have to be a turnaround in the price of oil and less uncertainty in the currency markets. Coming below that range would hurt the USD as the market is looking for reassurance that the U.S. If prices remain under this value of resistance, trend traders may continue to look for opportunities to sell the market. Conversely, in the event of a bullish reversal, traders may look for SSI to neutralize or even flip to a negative reading.
The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose.
With that major decision out of the way the market is now focused on when the next rate hike will come and how often the central bank will tighten monetary policy. The USD will await the report and the market reactions given the high levels of uncertainty after a volatile first week of 2016. Then inflation would rise above the target and the Fed would have to intervene more than expected. Traders may find initial bearish targets for the day at 1.2964, by extrapolating 1X todaya€™s 89 pip range. Alternatively, in the event of a bullish reversal, traders may watch for a move above this value to signify a shift in the present market conditions. You should be aware of all the risks associated with foreign exchange and futures trading, and seek advice from an independent financial advisor if you have any doubts. The minutes from the Federal Open Market Committee (FOMC) meeting in December were released on Wednesday, January 6 showed a cautious central bank.
This of course is a very unlikely scenario as oil prices do not seem to have hit bottom and the disagreements between Iran and Saudi Arabia have added to the oversupply issues pushing the price to near $30. Gone were the confidence and swagger from Fed Chair and members leading up to the rate hike announcement.

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