Comprehensive FX and Futures Daily Commentary
FastBrokers Research Team from FastBrokersFX at 01/08/10
Daily Market Commentary
EUR/USD Strengthens Following Weak Employment Change Number
The EUR/USD is strengthening in reaction to a weaker than expected Employment Change figure. Since the Dollar rallied after the turnaround in employment data in December, it seems reasonable that the Greenback is falling across the board in reaction to today’s release. Additionally, it will be interesting to see the EUR/USD log further gains today considering the level of anticipation heading into today’s data set. On a positive note, the headline Unemployment Rate did remain at 10% and analysts were expecting a basis point increase to 10.1%. As for the EU, the Union’s headline Unemployment Rate also printed at 10%, a basis point higher than analyst expectations. Furthermore, German Industrial Production came in 4 basis points below analyst expectations. Hence, EU economic data has started 2010 off on a sour note, and today’s data set has yielded a relative weakness in the Euro as exemplified by a dip in the EUR/GBP. Regardless, the Dollar could remain under selling pressure across the board due to today’s negative development in regards to U.S. employment.
Technically speaking, the EUR/USD still faces multiple downtrend lines along with the psychological 1.45 level, 1/05, 12/23, and 12/18 highs. Hence, some challenging near-term topside technicals are in place due to the EUR/USD’s downturn in December. As for the downside, the EUR/USD has technical cushions in the form of our 1st and 2nd tier uptrend lines along with intraday and 1/04 and 12/22 lows. The EUR/USD is still trading well below our 3rd tier uptrend line that runs through July lows. However, it will be interesting to see whether today’s disappointing U.S. jobs data provides enough of a topside boost to get the EUR/USD back above our 3rd tier uptrend line. On an encouraging note, the EUR/USD is setting higher lows, creating the possibility for a new base.
Present Price: 1.4333
Resistances: 1.4364, 1.4400, 1.4418, 1.4439, 1.4458, 1.4489
Supports: 1.4321, 1.4300, 1.4267, 1.4235, 1.4216
Psychological: 1.45, 1.40, December and September Lows 
GBP/USD Pops in Reaction to Weak U.S. Jobs Data
The Cable is rallying in reaction to a weaker than expected Employment Change figure. The Cable’s response is understandable considering the Dollar’s December rally was driven by a turnaround in employment data. It will be interesting to see if the Cable can extend its intraday gains due to the level of anticipation prior to today’s data release. We’re witnessing Dollar weakness across the board at the moment while the Pound exhibits a relative strength, as highlighted by a dip in the EUR/GBP. The Pound is deriving its strength from a better than expected PPI figure in conjunction with yesterday’s encouraging Halifax HPI reading. Hence, data from the UK has outperformed the EU during the first trading week of 2010. Meanwhile, stability in prices gives the BoE a little breathing room come February’s monetary policy meeting in regards to maintaining a tighter monetary stance. For the time being it will be interesting to see whether the Cable can piece together enough upward momentum to overtake the remainder of our downtrend lines.
Technically speaking, the psychological 1.60 level is serving as technical once again along with our multiple uptrend lines and 1/07 lows. As for the topside, the Cable still faces multiple downtrend lines along with January highs. Our 4th tier downtrend line could serve as a key technical barrier since it runs through 12/16 highs. Meanwhile, our 1st tier uptrend line separates the Cable from a retest of December lows.
Present Price: 1.6072
Resistances: 1.6085, 1.6107, 1.6152, 1.6181, 1.6219, 1.6246
Supports: 1.6050, 1.6023, 1.5995, 1.5973, 1.5925, 1.5901
Psychological: 1.60, January highs and lows, December lows, September lows 
USD/JPY Dips on Kan Remarks and Negative U.S. Jobs Data
The USD/JPY was negated by our 3rd tier downtrend line and is sinking during the U.S. trading session as investors react to a weaker than expected U.S. Employment Change figure. The pullback in employment data appears to be delivering a blow to the FX market as we witness Dollar weakness across the board. Investors should keep in mind that the Dollar’s December rally was triggered by a turnaround in U.S. employment. Hence, it’s understandable that investors are selling the Greenback in reaction to today’s data release. In addition to the discouraging U.S. jobs data, Yen investors are also reacting to remarks from Finance Minister Kan. Recall that yesterday’s pop in the USD/JPY was instigated by Kan stating that he may favor a weaker Yen to support Japan’s struggling manufacturing sector. However, Kan revised his comments today and explained that currencies should be determined by market forces. On the other hand, the government may intervene should the Yen reach abnormal levels. Kan’s retreat is very similar to when Fuji clarified his own aggressive monetary comments after taking office last year. In all, Kan’s more moderate monetary comment is cooling the USD/JPY’s upward momentum.
Technically speaking, the USD/JPY’s uptrend is still intact and the currency pair is setting higher lows. Meanwhile, the USD/JPY faces topside technical barriers in the form of our multiple downtrend lines along with 1/07 highs. Our 3rd tier downtrend line runs through August ’09 levels. Hence, a clear breakout above this downtrend line could signal a more prolonged uptrend and a potential retest of the highly psychological 100 area over the medium-term. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with 1/7, 1/5, and 12/24 lows. Furthermore, the psychological 90 area could serve as a technical cushion should conditions deteriorate. Meanwhile, investors should monitor broad-based activity in the Dollar to determine whether today’s U.S. jobs data will have a large impact on the major Dollar pairs as the trading session progresses.
Present Price: 92.47
Resistances: 92.47, 92.63, 92.83, 93.21, 93.44, 93.77
Supports: 92.26, 92.04, 91.88, 91.45, 91.22
Psychological: 95, 90, January and September Highs 
Gold Rises in Reaction to Discouraging Jobs Data
Gold popped off what is now our 3rd tier uptrend line after U.S. Employment Change data printed weaker than analyst estimates. The pullback in employment data yielded knee-jerk selloff in the Dollar, a positive catalyst for gold since it is negatively correlated with the Greenback. However, upward momentum in the EUR/USD and GBP/USD is tempering at the moment, so investors should monitor whether the Dollar continues its downward trajectory as the trading session progresses. We wouldn’t be surprised to see the Dollar to add onto intraday losses considering the level of anticipation heading into today’s release. Investors should keep in mind that the Dollar’s December rally was triggered by a turnaround in U.S. employment data. Hence, today’s dip in employment has understandably resulted in Dollar weakness. Meanwhile, gold is staring down previous January highs with the psychological $1150/oz level hanging nearby.
Technically speaking, gold has multiple uptrend lines serving as technical cushions along with intraday, 1/05, 12/30, and 12/22 lows. On an encouraging note, gold continues to set consecutive higher lows after bottoming out in December, and we are currently unable to form a noteworthy downtrend line. Therefore, gold could have some decent upward mobility should the Dollar weaken further. As for the topside, gold faces technical barriers in the form of 12/17 and 11/18 highs along with the psychological $1150/oz level.
Present Price: $1137.13/oz
Resistances: $1138.89/oz, $1141.33/oz, $1144.84/oz, $1148.91/oz, $1153.17/oz, $1159.25/oz
Supports: $1133.56/oz, $1131.08/oz, $1128.24/oz, $1124.16/oz, $1119.47/oz, $1115.08/oz
Psychological: $1100/oz, $1150/oz, December highs and January lows 
Crude Fights to Stay Above our 3rd Tier Uptrend Line
Crude futures are trading slightly lower today after U.S. Employment Change data printed below analyst expectations. The discouraging dip in employment is a negative catalyst for crude since it dents the outlook for aggregate demand. Furthermore, the Dollar weakened in reaction to today’s data set, a positive catalyst for crude since the futures are normally negatively correlated with the Greenback. However, upward momentum in the GBP/USD and EUR/USD is cooling a bit while persistently cold weather in the U.S., UK, and China is keeping crude above our 3rd tier uptrend line and the futures are still trading within spitting distance of previous January highs. Cold fronts around the globe are increasing demand for heating oil, a positive development for the price of crude. On the other hand, it remains to be seen whether today’s disappointing U.S. jobs data will result in more substantial Dollar losses since the Greenback’s December rally was triggered by a turnaround in employment. Therefore, investors should continue to monitor activity in the FX market assuming crude’s negative correlation with the Dollar holds true.
Technically speaking, crude presently has limited topside technicals in place besides previous 2010 highsy highs along with the psychological $85/bbl level. As for the downside, crude has multiple uptrend lines serving as technical cushions along with 1/06 lows and the psychological $80/bbl level should it be tested.
Price: $82.11/bbl
Resistances: $82.82/bbl, $83.18/bbl, $83.46/bbl
Supports: $82.26/bbl, $81.57/bbl, $81.12/bbl, $80.78/bbl, $80.42/bbl, $79.86/bbl
Psychological: $85/bbl, $80/bbl, 2009 and 2010 highs
S&P Futures Hold Strong Despite Disappointing Employment Change Number
The S&P futures are holding up relatively well considering the highly anticipated Employment Change figure came in well below analyst expectations. On a positive note, the previous release was revised higher while the headline Unemployment Rate remained at 10%, a basis point below analyst expectations of 10.1%. Meanwhile, the Greenback is recovering from its initial pullback in reaction to the news as we witness retracements in the EUR/USD and GBP/USD along with a bounce in the USD/JPY. That being said, investors should continue to monitor activity in the FX markets since it will be interesting how the session plays out as investors digest today’s economic news. Markets are still looking for direction and correlation. The first trading week of the New Year has been choppy at best with correlations out of sync. It remains to be seen whether the positive correlation between the Dollar and equities during December will continue into 2010. Economic data will be relatively light during the first half of next week with Trade Balance numbers from the U.S. and China highlighting the data wire. However, the wire will heat up as the week progresses with Retail Sales and an ECB monetary policy decision on Thursday.
Technically speaking, the S&P futures are riding along their medium-term uptrend as they look to create more separation from the highly psychological 1100 level. As for the topside, the S&P futures face technical barriers in the form of 2010 highs along with the psychological 1150 level should it be tested. As for the downside, the S&P futures have multiple uptrend lines serving as technical cushions along with the 1/5 and 1/3 lows and highly psychological 1100 level should it be tested.
Price: 1134
Resistances: 1132.75, 1135.5
Supports: 1128.5, 1127, 1124.75, 1122.25, 1119.75, 1117.25
Psychological: 1100, 1150, 1075, 2010 Highs and January Lows
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