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Thursday's trading has been volatile at some point


Aug 17, 2010
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Thursday’s trading has been volatile at some point. The dollar declined against the euro , but, at the same time, strengthened against the yen at the beginning of the session. Increased risk appetites promoted the euro’s trading against the dollar, as a result the European currency grew. Among the reasons for the dollar’s decline could have also been the US employment data, released on Thursday. The number of initial jobless claims increased more than expected - by 24 thousand instead of 16 thousand, anticipated previously, and totaled 436 thousand. The number of continuing jobless claims also grew, by 53 thousand to 4 270 thousand against the previous 4 217 thousand. This negative dynamics couldn’t obviously bring any positive moods for the dollar, especially taking into account the upcoming Fed’s main labor report, released this Friday. Today’s news block is going to bring some very significant information. Of most important will be the US employment data, as it has been already mentioned, and the upcoming Fed report. Unemployment level will remain 9.6% in November, but the number of non-farm payrolls should probably increase by 143/144 thousand, which will be considered quite a good growth for the second month in a row, taking into account October +151 thousand. ISM non-manufacturing PMI should attract the market’s attention too – the index is expected to grow 54.7 after the earlier registered 54.3. Good data from the labor market will obviously become a positive factor for the dollar, because the final data should be even better than the ones anticipated previously, and this fact might have been already considered by the market.


The euro has grown against the dollar on Thursday’s session and the reason for that were probably hopes that J-C Trichet will try to calm down the market by announcing additional purchases of the bonds. These expectations didn’t come true though, ECB’s president said that those special measures to promote liquidity had been temporal, so the euro began selling off. Later messages that ECB will still continue to buy bonds helped the euro to pair its losses and even close the session at higher positionsOf market’s attention today will be final PMI services assessment for November. Germany’s index is likely to 58.6 after the previous 56.0 in October, the index for the whole Eurozone is likely to show 55.2 against the previous 53.3. Compound PMI is expected with 55.4 after 53.8, which means a positive growth. The Eurozone’s October retail sales are also likely to change to better, but only month over month - +0.3% m/m after the previous -0.2% m/m, year over year index will probably decrease to +1.0% y/y after the previous +1.1% y/y. As for the investors’ moods, even though there are talks that the euro has bounces upwards, there are still fears that the currency will fall under pressure since the financial measures, which are currently taken to assist the peripheral countries are only a temporal relief – the risks of the crisis in these countries will remain anyway.


The situation with the British pound was almost the same with that of the euros, though the sterling’s gains weren’t as huge. In fact, the pound began to grow only when PMI construction data came out and manufacturing data afterwards. Britain’s activity in construction sector grew to 51.8 in November after 51.6 in October, The situation with payrolls, at the same time, left much to be desired. Today’s new block is going to bring the final part of Britain’s economic statistics, which would be PMI services index, that is expected to have decreased from 53.2 in October to 53.4 in November. Taking into account that services sector is considered the largest for the British economy, there are all chances to expect a surprise, in case the data turn out to be better than expected. As a result, the British currency will bounce up. It’s worth noting though, that the final driver for the trades in still the US employment report, coming out today.


The Japanese currency grew against the dollar on the last session. It’s a known fact thet the yen is influenced by the situation with the US 10- and 30-year old long term bonds. Taking into account that the situation here leaves much to be desired, the investors had to come cack to the funding currency, which is the yen. Today’s data brought the information on the number of credit volume for Japan’s corporations, which has that the lending in Japan continues to decrease, this time by -4.5% y/y after -4.0% ?/?. As for the yen’s outlook for today, a lot depends on the US labor report – positive or better than expected data would be considered negative for the yen, and the currency will decline.

Analysis by: written by Joaquin Monfort
Forex4you analyst

Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

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