The weaker than expected US labor report of November has contained the market sentiment by the end of the week as it has shown an unexpected rising of the unemployment to 9.8% from 9.6% in October and disappointing figure of the non-farm payrolls were expected to be around 150k shocking the market by adding just 39k hurting the greenback across the broad and the US stocks as well in the beginning of the US session which could cover its loses as the market expectations of a revising up of this reading have increased with the same report concluding of a strong upward revision of October to 172k from 150k in the first reading and this can be repeated in the next report of December in the beginning of the next year.
The single currency could jump easily above 1.33 resistance after these data underpinned by Trichet's recent 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 on the European stocks closing last week after strong rally has been triggered by the recent successful Portuguese and Spanish auctions helping the Single currency to find support finally at 1.297 despite the rising of the costs of covering these auctions but Trichet's comments about the ECB readiness and sticking to its previous pledges of buying bonds could add momentum to the stocks gain restoring more the confidence in the markets which are still waiting for Portugal and Spain to have a share of the offered aid by the IMF and the EU prepared package for bailing out the ailing economies by debt and subjected to increase before 2013 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 at 1.4281 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 and this was weighing negatively on the greenback but this has not stopped there as the profit taken wave buying the greenback has found momentum from the market worries about the debt situation of the European ailing countries which increased in November containing the market sentiment weighing negatively on the single currency to get down below 1.30 and hurting the risk appetite of the investors which has been hit once again by the tension in the semi Korean island hurting the markets pushing the inventors to square their carried trades further buying back the greenback and the Japanese yen and pushing the gold to get over 1380$ resistance breaking above 1400$ psychological level again underpinned by the rising of oil prices which are widely expected in the markets currently to go above 100$ next year with the recovery getting momentum and also the ECB promises to give unlimited funding of the European debts pushing its yields down moving their prices up by a huge ample of liquidities can be injected in the nerves of the EU economies too following US especially with bigger possibilities of having further hard times of the US labor market and having announced requests of funding from Spain and Portugal can move the EU to increase its offered package with the IMF which can have more funds from US for this purpose.
Best wishes
FX Consultant
Walid Salah El Din
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