Friday, July 8, 2011

Market Afternoon Overview - July 8, 2011

Previous session overview
The dollar and euro fell sharply against the yen and Swiss franc after an unexpectedly weak U.S. employment report. 

Risk sentiment plummeted after the government said employers added just 18,000 jobs last month, well short of the median forecast for gains of 125,000. 

The dollar quickly tumbled against the yen and Swiss franc as investors sought out the two safe havens. The euro was hit equally as hard.

The dollar was at JPY80.78 from about JPY81.49 just before the report was released. The dollar was at CHF0.8423 from CHF0.8490. The euro was at JPY115.26 from about JPY116.15. 

The Canadian dollar plummeted to the day's low early Friday after U.S. nonfarm payroll data significantly trailed estimates. Investors were keenly watching U.S. payrolls for signs of renewed growth, with the Federal Reserve having drawn the curtains on its second round of quantitative easing. 

The U.S. dollar surged to a high of CAD0.9646 from CAD0.9577. Recently it was trading at CAD0.9653. The Canadian dollar, considered a barometer of risk and strongly tied to growth in the U.S., directly tracks U.S. economic data, along with changes in prices of commodities, particularly oil. 

U.S. Non Farm Payrolls rose 18,000 last month, far less than expected, as small gains in the private sector were just enough to outweigh continued government job losses.
Market expectation
For USDJPY below JPY80.50/55 (Jul 4 low/day low), the pair might find support at JPY80 15/25 (Jun 24/30 lows) and JPY80.00 (Jun 17/22 lows). On the upside, resistance levels lie at JPY80.80 (previous lows), and above here, JPY81.40/50 (day highs) and JPY81.80 (May 30 highs).

GBPUSD needs to see a strong break/close above USD1.6100 to ease the downside pressure. It will have to be seen how the pair manages to close today for the week. On the downside important Support is seen in USD1.5900-5880 region and we expect this Support region to hold if the pair fails to see a strong break above USD1.6025 and dips in the US session today, report analysts.

The EURGBP remains mostly bearish heading towards the weekend break, mostly unaffected by the US jobs report and trading near lows just to the upside of GBP0.8900.