The weaker than expected US labor report of October which has shown a rising of the unemployment to 9.8% from 9.6% in October and disappointing US non-farm payrolls were expected to be around 150k but shocked the market by adding just 39k hurting the greenback across the broad and the US equities market in the beginning of the US session despite the up revision of October number to 172k from 150k which was included in the report. The market is anxiously waiting now for US factory orders of October which were actually expected to get down by .7% after rising in September by 2.1% and US non-manufacturing index to be 54.7 from 54.3 in October and further hurting data can effect negatively on the risk appetite at this last session of the week as the worries about the labor market and the effect of the Fed's quantitive easing policy to put the economy on its track.
The single currency could jump easily above 1.33 resistance after the data underpinned by Trichet's comments which have brought back some of the lost inventors' confidence in the European debt market announcing an extension of the working of its buying bonds plans aiding the debt ailing economies. The single currency has been dragged down below 1.31 to 1.306 again yesterday as the investors have seen in these announced increasing of what is offered of Euros to the market devaluating of its value but in the same time before bouncing back to be traded just above 1.32 as this announced policy of the ECB has restored confidence in the market improving the risk appetite driving the equities prices up weakening the greenback by the release of the US labor weak data which tempered the risk appetite weighing negatively again on the European stocks currently.
But anyway the investors worries about the European debt which contained the market sentiment recently have just calmed down by these comments about the ECB readiness and sticking to its previous pledges and also the successful recent Portuguese and Spanish auctions which has helped the Single currency to find support finally this week despite the rising of the costs of covering this auctions further which can refer to the probability of having a share from this offered aid by the IMF and the EU prepared package for bailing out the ailing economies by debt and unstable debt situation especially if there faced further weakness of their growth pace as we have seen Greece Q3 GDP shrinking by 1.1 while in Germany, it's .7% dragging the EU growth average in the third quarter of this year to by .4%.
The single currency next waited resistance should be in breaking above the area from 1.3385 and 1.3425 versus the greenback as getting over it can open the way to 1.359 following by the recent previous top at 1.379 and this can be a stronger level as breaking it can open the way again to 1.4 psychological level while the way down should be met by supporting level at 1.306 then the main supporting level at 1.297 whereas the pair has met new buying interest recently and where the pair has formed a previous intermediate bottom of its rally which has ended to 1.428 and breaking it can lead to 1.26 as the main bottom of this previous ascending rally which has ended by the release of US non-farm payroll of October which has come better than expected adding 151k after losing 41k in September while the market was waiting for adding just 60k encouraging the investors to take profits covering their greenback selling as the Fed has actually taken its waited decision of adding another 600B$ to its adopted quantitive easing policy of buying US treasuries till the end of June 2011 but this was just a beginning as the greenback has continued its rising across the broad fueled by the market worries about the debt situation of the European countries again which increased in November containing the market sentiment weighing negatively on the single currency and the risk appetite of the investors which has been hurt again by the tension of the semi Korean island which tempered the markets pushing the inventors to square further their carry trades buying back the greenback
Best wishes
FX Consultant
Walid Salah El Din
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