FX traders will be eyeing the world’s largest economy this week, along with additional data from G-8 countries, as the US unemployment number will once again be the talk of the town. Adding to some near term activity will also be the fact of a shortened trading week in the US as a bank holiday is observed. Nonetheless, here we are once again with expectations looking for hope of stabilization in the domestic labor market.

US Non-Farm Payrolls Report

Falling by 345,000 in last month’s report, the non-farm payrolls figure is expected to show further deterioration in the labor market, with analysts forecasting a drop of 375,000 job losses for the month. However, hints have surfaced that may allude to a better than expected actual posting for June. Specifically, initial jobless claims for the month have been on the mend, dropping beneath the four week moving average in just two of the four released throughout the month. With the four week moving average landing in the approximate 617,000 area, noticeable prints of a mere 601,000 and 608,000 for mid June are helping to lend an optimistic bias for the monthly figure. Furthermore, recent manufacturing indexes have shown an uptick in employment components, if not a stabilization, as the sector continues to be positively supported for the moment. The positive tone may be detrimental to the US dollar in the short term as it sparks further rumors of near term rate hikes, being a total reversal of sentiment involving last week’s decision on indefinitely low interest rates. Look for 1.4143 (June 10^th high) 1.4245 (June 1^st high) resistance levels in the EURUSD to remain heavy in potential shorting biases.

Will Euro Get A Boost On US Data?

European Central Bank Rate Decision

Not much is expected for the ECB rate decision this week as estimates continue to remain stable of a no decision from European monetary leaders. Rates are continually being deemed “appropriate” for the time being by President Jean Claude Trichet and will likely be kept at the current 1 percent standing. At this point in time, it has become increasingly clear that European officials are continuing down the path of inflation control and keeping requests for economic expansion at bay as “additional steps are not necessary”. As a result, with risk taking appetite still lingering, the euro currency may remain top dog against the greenback in the near term.

Canada Monthly Growth

Anticipated earlier in the week, traders in the Loonie will be targeting the monthly GDP growth figures. Scheduled for Tuesday, the report is expected to show a more stabilized economy following a 0.3 percent downtick in the previous month. Expectations are for Statistics Canada to show a 0.1 percent contraction in April, which lends to brighter hopes for a quarter on quarter improvement. For the first quarter, Canada’s economy shrunk at an alarming 5.4 percent pace as manufacturing and output declined on a global economic crunch. As a result, higher figures will likely lend strength to the Canadian dollar, which incidentally has lost some luster in the past week versus the US dollar. Current resistance at the 1.1600 handle is likely to remain important in the short term.

Loonie's Time To Shine

Tags: Canadian Dollar, Currency Market, Euro Currency, US Dollar, US NonFarm Payrolls

This entry was posted on Sunday, June 28th, 2009 at 4:43 pm and is filed under Canadian Dollar, Currency Trading, Economic Indicators, Euro, US Dollar. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.