Forex Market Updates & Commentary

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• Fed Dudley (voting Member) says labor market slack likely to persist through 2012
• GBPUSD head and shoulder remains in tact
• Gold moves higher toward $1498 resistance area
• Silver back above 100 day MA at $34.40. $35.60 the next target
• USDJPY moves above trendline and 100 hour MA
• EURUSD falls on the strong number but bounces off support
• Much better NFP. Unemployment rate higher though
• NY Opening Forex Call: Unemployment Day.
• Nonfarm Payrolls & Unemployment Rate Data Due at 8:30AM
• Yellen makes no comment on US policy
• Trichet: ECB has no exchange rate target.
• Canadian Unemployment
• Trichet: “it’s in the interest of the international community to have a credible, strong dollar”.
• German March industrial production rises 0.7% from previous month
• Trichet says ECB remains “extremely alert” on inflation

Fed Dudley (voting Member) says labor market slack likely to persist through 2012 Posted: 06 May 2011 07:05 AM PDT US Economy grew at a modest pace since recession 1st quarter likely to be temporary High oil price, declining home prices pose risk Considerable way before meeting mandate Fed must ensure inflation expectations stay moored

GBPUSD head and shoulder remains in tact Posted: 06 May 2011 06:29 AM PDT The neckline was broken yesterday and the price moved sharply lower. The underside of the neckline trendline has held the1.6460 level (1.6462 high).  The price has moved back down from there.  Staying below that neckline keeps the bearish bias.  Activity is choppy in the pair. A move below the 1.6408 level (50% of the days range) should switch the bias back lower).

Gold moves higher toward $1498 resistance area Posted: 06 May 2011 06:20 AM PDT $1498 is the next target for Gold as it moves back higher today (see chart above).  A move above that level will next target the 1505.25 level which is the 38.2% of the move down from the May high and also trendline resistance area. (see chart below).

Silver back above 100 day MA at $34.40. $35.60 the next target Posted: 06 May 2011 06:07 AM PDT Silver is back above the 100 day MA at the $34.40 level. This level will be eyed today by traders.  Price above and the bias is bullish. Price below and the bias is bearish. Looking at the hourly chart, the price has been tracking the channel in the hourly chart below. The next target to breach is the 35.60 level. A move above should see further upward momentum with the $37.20 level not out of the question (represents the higher trendline in the chart below).

USDJPY moves above trendline and 100 hour MA Posted: 06 May 2011 06:01 AM PDT The initial surge in the USDJPY pushed the price above 100 hour MA and the trendline at the 80.71 level in the first few minutes. The corrections off the top came down to the 38.2% of the intraday surge higher (at 80.64). This keeps the bulls in charge. A move below the 80.64 level will likely dull the upward momentum for the pair.

EURUSD falls on the strong number but bounces off support Posted: 06 May 2011 05:43 AM PDT The EURUSD fell on the back of the better jobs data but has bounced off the targeted support at the 1.4450-55 area. The level corresponds with the channel trendline in the daily chart above.  IT is also the 61.8% retracement from the April 18th low.  These levels were outlined as key targets in the Morning Opening Forex Call. The pair has moved back above the 1.4500 level and is testing the 38.2% of the days range. The next target above is the 1.4526 level which is the channel on the intraday chart (see below). The higher unemployment number versus the jobs gained is balancing things out for the dollar it seems. Key support held which pleases the dip buyers. The question becomes is the market still short dollars?

Much better NFP. Unemployment rate higher though Posted: 06 May 2011 05:31 AM PDT 244K NFP vs 185K e 269K Private Payroll vs 200k e Unemployment 9.0% up from 8.8% last month Manufacturing jobs +29K vs 20K Avg Earnings +0.1% Lags behind estimate Weekly hours 34.3 - as expected. Manufacturing +29K Construction +5 K Mining +10K Trade, Transportation and Utilities +71KInformation +2K Financial Activity +4K Professional and Business Services +51K Educ and health Services +49K Leisure and Hospitality +46K Other Services +1K Government -24K Revisions slightly higher.

NY Opening Forex Call: Unemployment Day. Posted: 06 May 2011 05:04 AM PDT

Nonfarm Payrolls & Unemployment Rate Data Due at 8:30AM Posted: 06 May 2011 04:45 AM PDT

Yellen makes no comment on US policy Posted: 06 May 2011 04:30 AM PDT Calls for flexible exchange rates.  Open capital markets bring higher living standard. She is speaking in Finland.

Trichet: ECB has no exchange rate target. Posted: 06 May 2011 04:20 AM PDT The exchange rate is one of many factors Second round effects have been avoided.

Canadian Unemployment Posted: 06 May 2011 04:03 AM PDT Unemployment rate - Survey: 7.7%   Actual: 7.6%   Prior: 7.7% Net Change in Employment - Survey: 20.0K   Actual: 58.3K   Prior: -1.5K Full Time Employment Change - Actual: 17.2   Prior: 90.6 Part Time Employment Change - Survey: 65.0   Actual: 41.1   Prior: -92.1 Participation Rate - Survey: 66.9   Actual: 67   Prior: 66.9

Trichet: “it’s in the interest of the international community to have a credible, strong dollar”. Posted: 06 May 2011 03:28 AM PDT

German March industrial production rises 0.7% from previous month Posted: 06 May 2011 03:00 AM PDT

Trichet says ECB remains “extremely alert” on inflation Posted: 06 May 2011 02:40 AM PDT Monitoring all developments “very closely”. Never pre-committed on rates. Environment is “very demanding”. drop in commodity prices is “good”. WE do at ant time what we judge is necessary to deliver price stability. Will consider new ECB projections, data when weighting policy in June.

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