The Dollar remained on the back-foot as global stocks rallied and US data improved investor sentiment. The big news was the better than expected February Non Farm Payrolls at -36k vs. -56k forecast released on Friday which saw Global stocks rally to fresh 2010 highs. February Services PMI came in at 56.5 vs. 57.7 forecast whilst Manufacturing PMI was solid at 53 vs. 51 forecast. The Euro was beholden to the news flow relating to the Greece debt situation. Concerns early in the week pushed the pair to fresh lows under 1.3450 before good Greece bond auctions and political support from its European neighbors allowed the Euro to bounce. The ECB rate meeting saw the rate left at 1.0% as expected. January German Factory Orders surged 4.3% vs. 1.6% m/m forecast. The EUR/USD fell -0.03% closing at 1.3624, after opening the week at 1.3628.

The Japanese Yen the volatility continued with fresh lows seen on GBP/JPY and USD/JPY before direction dramatically reversed later in the week after the US jobs numbers. The Commodity Currencies did the best as gold and oil surged with CAD/JPY and AUD/JPY both gaining +3%. The GBP had a dramatic week with the first day of trading seeing a 400 pip drop on concerns that UK elections would see a hung parliament for the first time in decades. The rest of week saw the pair stage a solid rebound and closed just under where it opened but sentiment is fragile and the downside is still in focus. The BOE held at 0.5% and the Asset purchase Program was maintained at 200bn. On a positive note the February Services PMI surged to 58.4 vs. 54.5 previously. GBP/USD fell -0.66% closing at 1.5135 after opening at 1.5235. The AUD was supported on multiple fronts but the gains were quite contained given the news. The RBA raised rates to 4.00% and Q4 GDP was +0.9% Q/Q. Solid commodity rallies and strong risk appetite also underpinned the move higher. AUD/NZD broke above 1.3000 for the first time in over a decade. The AUD/USD gained +1.33% closing at 0.9076 after opening at 0.8955.

The forex trading week preview

In the States; On Thursday, January Trade Balance forecast at -41bn vs. -40.2bn previously. Also released, Weekly Jobless Claims forecast at 450k vs. 469l previously. On Friday, February Retail Sales are forecast at -0.2% vs. 0.5% previously. Also released, UoM Consumer Confidence forecast at 74 vs. 73.6 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, German Industrial Production is forecast at 1.0% vs. 4.7% previously. On Wednesday, German CPI is forecast at 0.4% y/y. Also ECB President Trichet speaks. On Thursday, SNB 3-month Libor is forecast at to remain unchanged 0.25%. On Friday, January EU industrial Production is forecast at 0.7% vs. -1.7% m/m. In the UK; On Tuesday, January Trade Balance forecast at -3.05bn vs. -3.26bn previously. On Wednesday, January Manufacturing Production is forecast at 0.2% vs. 0.9% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Thursday, Q4 Final GDP is forecast at 1.0% vs. 1.1% initially. In Australia; On Wednesday, RBNZ is forecast to remain at 2.5%. On Thursday, February Employment change is forecast at 15k vs. 52k previously. The February Unemployment rate is forecast to remain at 5.3%. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro – 1.3630

Initial support at 1.3552 (Mar 4 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3736 (Mar 3 high) followed by 1.3788 (Feb 17 high)

Yen – 90.40

Initial support is located at 87.74 (Dec 10 low) followed by 87.37 (Dec 9 low). Initial resistance is now at 90.96 (0.5 of 93.77-88.14) followed by 91.90 (Feb 22 high).

Pound – 1.5130

Initial support at 1.4959 (Mar 3 low) followed by 1.4855 (Mar 2 low). Initial resistance is now at 1.5136 (Mar 4 high) followed by 1.5209 (Mar 1 low).

Australian Dollar – 0.9070

Initial support at 0.8979 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9086 (Mar 3 high) followed by 0.9147 (Jan 21 high).

Gold – 1135

Initial support at 1125 (Mar 4 low) followed by 1111 (Mar 1 low). Initial resistance is now at 1144 (Mar 3 high) followed by 1161 (Jan 11 high).

Oil – 81.80

Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

Despite two major February snowstorms February US unemployment rate was unchanged at 9.7% and nonfarm payroll (nfp) losses were significantly less than expected declining by 36k. The nfp decline was less than half the consensus of analysts. A number of analysts had expected the snowstorms to contribute to up to 100k to 200k of nfp losses. The Bureau of Labor Statistics said that the snowstorms may have depressed the payroll report but that they could not quantify the impact. This has led to the debate over whether the February jobs report would have been positive without impacting the snowstorms. The February unemployment report suggests that US labor market is stabilizing and that jobs growth lies ahead.

There were a number of positives in the US February unemployment report. The number of long-term unemployed workers fell by 180k to 6.1mln. This was the largest decline since June of 2006 in the number of long-term unemployed workers. Manufacturing jobs rose by 1k.Manufacturing jobs have gained for two months in a row. Temporary help jobs rose by 48k. Temporary help is seen as step closer to permanent employment. Health care added 20k in new jobs. Average hourly earnings rose by 0.1% and nfp losses were revised lower for the prior two months. This confirms that fewer jobs have been lost in December and January. One of the biggest negatives in the February report was the construction employment fell by 64k. Also 15k of census workers were added to the February report. Census jobs are temporary jobs that will not lead to permanent employment. On balance the February jobs report suggests that the February storms masked improvement in the US employment outlook.

Although the February unemployment report appears to suggest the beginning of a trend in job gains, the report does not suggest a strong recovery. Last week the US Labor Department reported that US productivity rose to 6.9% in the fourth quarter. The jump in productivity suggests that those still employed are being forced to increase productivity to make up for lost workers as business activity is picking up. The continued rise in productivity is not sustainable and this suggests that employers will soon need to hire more workers. A wave of hiring may be coming soon. The key issue is what impact the improving employment outlook will have on risk sentiment and Fed policy outlook.

January consumer confidence posts a sharp decline. A CBS poll shows that a majority of Americans are still worried about job losses and only 17% of Americans think the countries economy is in good shape. The decline in consumer confidence is a concern for the strength of the US recovery because 70% of GDP is made up of consumer demand. Despite uncertainty about consumer demand some of the Fed board members indicate that interest rates may have to rise even while unemployment remains elevated. An NABE survey of business economists finds that a Fed rate hike is expected within the next six months. There is increased speculation that the Fed may begin a shift in policy bias at the March 16th policy meeting amid signs of that the US labor market is stabilizing. Improvement in the US employment outlook may make it harder for the Fed to delay its exit strategy. This may mean that the current trend of improvement in risk sentiment could give way to speculation that the Fed exit of stimulus presents a risk of a double dip recession in the US.

The February unemployment report suggests that there is jobs growth ahead. Despite the improvement in the outlook for jobs growth headline US unemployment rate may rise as frustrated workers began once again to look for work. Economist Mark Zandi of Moody’s economy.com said Friday that the US jobless rate could hit 10.5% by Election Day. According to Zandi there are close to 2mln people who have left the official count of the labor market over the past years giving up looking for work. Zandi says that when these workers look to re-enter the workforce the economy may not be creating jobs fast enough to meet the demand.

The US February unemployment report suggests that jobs growth will return in March. In the short term we suspect that the trend in improving risk sentiment fueled by the February jobs report will continue. The glimmers of hope sparked by the February unemployment number may encourage frustrated workers to once again search for employment and this could send the US unemployment rate back above 10% in the months ahead. The CBS survey noted above suggests that despite signs of improvement in the US labor force there remains great concern about the risk of job loss. The troublesome reality is despite the stability in February employment report 15mln Americans are out of work and millions more are working part time or are underemployed. How the coming rise in headline employment impacts consumer sentiment will be key to the sustainability of the US recovery and risk sentiment. The February snow appears to have masked the recovery in employment during February and we expect an nfp rise in the March report. What the rise in nfp means for the US economy will depend on when the Fed and government cut back on monetary and fiscal stimulus. An early withdrawal of stimulus could curb the jobs recovery and increase the risk of a double dip recession. The return of jobs growth in March may not be sustainable if stimulus is withdrawn to soon. Pimco’s Gross says the biggest worry is the Fed withdraws stimulus too quickly.

Overview
USD starts the week mixed to lower pressured by a modest improvement in risk sentiment. The improvement in risk sentiment is attributed to Friday’s release of better than expected US unemployment and stronger consumer credit, a statement from French President Sarkozy that the EU is ready to help Greece and in reaction to a Financial Times report which suggests that China is ready to shift its currency policy and break its USD peg. US January consumer credit rose for the first time in over a year and posted its largest increase since July 2008. The Nikkei surged 2.9% adding to the improvement in risk sentiment but European equities and US equities struggled which limited the downside for the USD. European economic data was generally positive with EU investor sentiment improving and Swiss unemployment and retail sales coming in better than expected. There was no major UK economic released today and GBP consolidated recent gains. Commodity currencies traded higher supported by the improvement in risk sentiment with the AUD trading at a six-month high. AUD was also supported by M&A news that Royal Dutch Shell and Petro China are bidding for Australia’s Arrow Energy. CAD traded higher in reaction strong Canadian housing starts report and BOC rate hike speculation .There was limited reaction to an NABE report which says that business economists see a Fed rate hike within the next six months. CFTC commitment of traders for the IMM shows that speculators cut USD speculative long positions in halve last week. The CFTC report suggests that speculative sentiment towards the USD is turning less positive. There were no major US economic reports released in today’s trade. Focus turns to this week’s release of US jobless claims retail sales and consumer sentiment.

Today’s US data:
No major US economic data was released in today’s trade.

Upcoming US data:
This week’s US economic calendar includes the March 10th release of January wholesale inventories and sales. Wholesale inventories are expected to rise by 0.3% compared to a 0.8% decline last month. Wholesale sales are expected unchanged at 0.8%. The February Treasury budget will also be released on March 10th expected at -200bln compared to -193.9bln last month. On March 11th initial jobless claims for week ending 03/06 will released expected at 460k compared to 469k last week. January trade deficit also will be released on March 11th expected at -40.3bln compared to -40.2bln last month. On March 12th February retail sales and March University of Michigan consumer sentiment will be released along with January business inventories. Retail sales expected flat compared to 0.5% rise last month. Michigan consumer sentiment is expected at 73.5 compared to 73.6 last month and business inventories are expected to rise by 0.2% compared to 0.2% decline last month.

JPY
JPY traded mixed to lower pressured by BOJ ease speculation and an improvement in risk sentiment as the Nikkei rallies 2.9%. Last week Japanese press reported that the BOJ is considering easing monetary policy to combat deflationary pressures and boost the Japanese domestic economy. The Nikkei rallied to its highest level since January 26th supported by BOJ ease speculation and in reaction to better than expected US employment data. JPY was also pressured by demand for the EUR/JPY cross with the EUR supported by report that the French PM said that the EU will rescue Greece if necessary. JPY downside was limited by a Financial Times report which says that China is considering breaking its USD peg and shifting currency policy in response to the global financial crisis. If China allows the Yuan to be revalued the stronger Yuan could boost demand for Asian currencies. JPY sometimes trades as a proxy for the Yuan. Japanese economic data was mixed with the current account surplus for January widening to 899.8bln in February M2 reported to have risen by 2.7%. JPY remains vulnerable to improving risk sentiment and BOJ ease speculation. Focus turns to this week’s release of Japan’s Q 4GDP. The GDP report will be important to the outlook for BOJ policy. A stronger GDP report may dampen BOJ ease speculation.

On March 9th January leading indicators will be released expected at 3.7% compared to 3.6% last month. On March 10th February CGPI will be released expected to rise by 0.1% compared to 0.3% last month. January machinery orders will be released expected at -5.2% compared to 20.1% last month along with Q4 preliminary GDP expected at 1.1%. On March 12th January revised industrial output will be released expected at 2.5% compared to 1.9% last month.

Key technical levels to watch in USD/JPY include support at 89.15 the March 5th low with resistance at 91.00.

EUR
EUR traded higher supported by easing fears over Greece as French President Zarkozy says that the EU is prepared to help Greece if necessary and former Fed Chairman Volcker says that he expects the EUR to survive the Greek budget crisis. Zarkozy made his statement after meeting with the Greek prime minister on Friday. EUR was also supported by report of improving investor sentiment. EU March Sentix improved to -7.5 from 8.2 last month. The Sentix index was expected at -8.8. Sentiment towards the EUR has turned mixed as investors aren’t sure if the passing of the Greek budget crisis is temporary or if the investment community is going to look beyond sovereign debt risks and Europe and trade on improving risk sentiment. Despite today’s report of improvement in EU investor sentiment the ECB is expected to remain on hold and maintain a dovish policy bias. There is speculation that EU sovereign debt risks will constrain ECB monetary policy and delay the ECB exit plans. EUR remains vulnerable to concern about EU sovereign debt risk and speculation the Fed may hike rates before the ECB. Speculation of an earlier Fed rate hike is fueled by last Friday’s release of better than expected US employment report and today’s NABE report which says that economists expect the Fed to hike rates within the next six months. Focus turns to this week’s release of EU CPI. The ECB is expected to remain on hold because of continued subdued EU inflation and uncertain outlook for EU sovereign debt risk.

On March 10th EU CPI and current account balance will be released. On March 12th EU January industrial production will be released expected at -1.5% compared to -1.7% last month.

The technical outlook for the EUR is negative. Expect EUR support at 1.3530 the March 5th low with resistance at 1.3712 the March 4th high.

CHF
CHF traded higher supported by report of strong Swiss economic data and an improving risk sentiment as Asian equity markets rally in reaction to better than expected US employment data and easing concern about the Greek fiscal crisis. Swiss February unemployment improved to 4.4% from 4.5% last month and January retail sales rose by 4.4%. The SNB will hold a policy meeting Thursday and are expected to hold monetary policy steady but there could be increased discussion of a exit strategy by the SNB in light of improving Swiss economic outlook and diminishing fears about EU sovereign debt risks. Focus turns to Tuesday’s release of February CPI expected unchanged at 1% and SNB policy meeting. SNB officials will be monitoring closely the CPI figure to gauge the impact of recent CHF price action on inflation. Thursday the SNB is expected to hold its target rate unchanged at 0.25%.EUR/CHF cross continues to trade in narrow range holding above the March intervention lows with the cross supported by threat of SNB intervention. Expect USD/CHF support at 1.0648 the March 3rd low with resistance at 1.0810 the March 5th high.

GBP
GBP traded sideways after rebounding from a 10 month low set versus the USD last week. GBP has experienced a short covering rally sparked by a the BOE’s decision to hold monetary policy unchanged and maintain the current level of asset purchases and in reaction to Friday’s report of a sharp rise in UK PPI. UK February PPI rose to a 14 month high at 4.1% y/y. In addition last week the UK reported that consumer confidence rose to two year high. The rise in the consumer confidence contrasts with report of weaker mortgage approvals and lending. UK economic data paints a mixed picture for the UK recovery and generates concern about the strength of the UK economy. Concern about the strength of the UK recovery and uncertainty about upcoming UK elections should limit the GBP rally. UK elections are expected to be held on May 6th. The UK election polls suggest that neither the Conservative or Labor party will win a significant majority in parliament and this could lead to a hung parliament. The latest ICM opinion poll shows that the Tories will fall six seats short of an overall majority in parliament. A hung parliament may reduce the chance of the new UK government taking action to reduce the UK budget deficit. Rating agencies have put the UK on notice that if credible action is not taken to reduce the UK deficit the UK AAA sovereign debt rating is at risk or downgrade. GBP may find modest short-term support from the BOE steady policy decision but GBP remains vulnerable to concern about UK debt outlook and uncertainty about the UK economy. Focus turns to this week’s release of UK retail sales and industrial production.

This week’s UK economic calendar includes the March 9th release of the January trade balance expected at -7.4bln compared to -7.2bln last month along with February retail sales expected at -0.5% compared to -1.8% last month. On March 10th January industrial production will be released and NIESR GDP estimate. The January industrial production is expected at 0.3% compared 0.5% last month. NIESR GDP estimate is expected at 0.3%.

The technical outlook for GBP is mixed as GBP trades back above 1.5000. Expect near-term support at 1.4960 the March 3rd low with resistance at 1.5205 March 2nd high.

CAD
CAD traded higher supported by strong housing data and firmer or equity market trade. Canada’s February housing starts came in much higher than expected reported at 196.7k, the trade had expected a reading of 189.5k. The 6.1% rise in its Canadian housing starts supported the CAD along with rising commodity prices and improving risk sentiment. Crude prices traded above $82 a barrel and the CRB rallied in reaction to stronger global equity market trade. CAD has been outperforming supported by last week’s decision by the BOC to maintain steady monetary policy and signal a shift in its policy bias. In the BOC policy statement the BOC dropped reference to inflation risks being to the downside. This has encouraged speculation that the BOC may hike interest rates sooner than the Fed and that the BOC rate hike could come as early as August. Canadian interest rate swaps widened to a two year high versus US last Wednesday. The widening of the swap spread reflects increased speculation that the BOC will hike interest rates before the Fed. Today’s Canadian housing data follows last week’s strong Canadian GDP report and adds to BOC rate hike speculation. Canada’s Q4 GDP rose at its fastest pace in nine years. The BOC has confirmed that it plans to maintain steady rate policy through June 2010 but the odds of the BOC rate hike before year end are rising. CAD also is benefiting from improving fiscal outlook in Canada. Last week Canada announced its fiscal budget and Canada’s PM Harper pledged to bring the Canadian budget back in balance by 2016. Canada’s fiscal outlook stands in stark contrast to the US, Japan and Europe. This week’s main focus will be Friday’s release of Canada’s unemployment rate for February. Consensus is that Canada’s jobs creation slowed in February. A weaker than expected Canadian unemployment report may take some of the steam out of BOC rate hike speculation. As the CAD approaches parity it may increase the risk of verbal intervention from the BOC and Canadian officials. The BOC noted in its policy statement concern about the potential drag for the Canadian economy from strong CAD.

On March 11th Q4 capacity use and January trade balance. Capacity use is expected at 67.9 compared to 67.5 last quarter. The trade balance is expected at 0.50bln compared -0.25bln last month. On March 12th February unemployment will be released expected unchanged at 8.3% with employment growth expected at 30k compared to 43k last month.

The technical outlook for CAD is positive as USD/CAD trades below 1.0500. Look for near-term support at 1.0225 the January 14th low with resistance at 1.0368 the March 3rd and high.

AUD
AUD traded at a six-week high versus the USD supported by improving risk sentiment as Asian equities rally and the NASDAQ trades at an 18 month high. The improvement in global equity markets is attributed to last Friday’s release of better than expected US employment, diminishing concern about the Greek fiscal crisis, and BOJ ease speculation. AUD/JPY has rallied over 3% over the last two trading sessions. AUD was also supported by M&A news with report that Royal Dutch Shell and Petro China are bidding for Australia’s Arrow Energy. The deal is estimated to be worth $3bln. A report that China may be considering breaking its USD peg adds support to the AUD. If China breaks its peg to the USD it may help to reduce global trade imbalances and boost the global recovery outlook. Last Tuesday, the RBA hiked interest rates 25bps to 4%. In the statement accompanying the RBA rate hike the RBA appeared to have a balanced outlook towards inflation, growth and future policy decisions. This has sparked speculation that the RBA may pause its rate hike cycle in April. RBA watcher McCrann that the RBA is likely to pause its rate hike cycle in April. McCrann however still expects the RBA to hike rates to 5% by year end. Last week Australia reported strong manufacturing data and improving domestic growth. Focus turns to this week’s release of Australia’s February unemployment. A strong employment report would add fuel to RBA rate hike speculation. AUD price direction will focus on risk sentiment and the direction of equity markets.

On March 10th January housing finance will be released expected at 2.5% compared to -5.5% last month. On March 11th February unemployment will be released expected at 5.2% compared to 5.3% last month with the participation rate unchanged at 65.3

The technical outlook for the AUD is positive as the AUD trades above 9100. Expect AUD support at 8985 the March 5th low with resistance at 9200.

• The USD and JPY are trading lower to start the week as the Nikkei rises 2.9%, risk appetite improves in reaction to Friday’s release of better than expected US unemployment data, on report that China may be considering a change in its currency policy and speculation that the EU will rescue Greece if necessary, Swiss unemployment comes in better than expected, EU investor confidence improved in March, commodity currencies trade higher supported by improving risk appetite, AUD trades at a six week high versus the USD
• Focus turns to today’s release of Canada’s housing starts
• The Financial Times reports that China is considering breaking the USD peg and shifting currency policy in response to the global financial crisis
• French President Sarkozy says that the EU is ready to help Greece, former Fed Chairman Volker says he expects the EUR will survive the Greek budget crisis
• AUD supported by report that Royal Dutch Shell and Petro China are bidding for Australia’s Arrow Energy, AUD higher
• Japan’s January current account surplus widens to 899.8bln, February M2 money supply rose by 2.7%, JPY lower
• EU March Sentix index at -7.5 compared to -8.2 last month, EUR higher
• Swiss unemployment rate came in at 4.4%, January retail sales rise by 4.4%, HF higher
• NABE survey says business economists see a Fed rate hike within the next six months
• Economists warn that the US budget deficit may threaten the US ability to borrow
• January consumer credit rose by 4.96bln, a reading of -4.5bln was expected, this marked the first rise in consumer credit in over a year and the largest increase since July 2008
• CFTC commitment traders for the IMM shows that speculators cut USD speculative long positions last week
• US equity markets set to open mixed, European equities flat, Nikkei closed 216 points higher

Upcoming Events

• US - Monday, no major US economic data is due for release today
• CAN - Monday, February housing starts will be released expected at 189.5k compared to 186k last month

• On Friday’s trading session we saw the release of the monthly Nonfarm payrolls report. The report showed that the US shed 36K jobs for the month of February. The report beat expectations of -60K. The market indeed did anticipate a worse number due to the severe weather conditions faced by the US work force. So overall the -36K print was interpreted as an extremely positive number indicating eventual job recovery. We also had consumer credit figures released on Friday which saw credit expand by $5bln.
• In Japan the BoJ have reportedly extended the 0.1% 3month lending facility by increasing the size beyond the JPY10trn limitation. This indicates the BoJ concerns over recent JPY appreciation and although not quite QE it is a move towards further monetary easing and a period of prolonged zero rate policy. Following the positive NFP news in the US and further easing in Japan the star performing pair on Friday was the USDJPY rallying to highs of 90.50 after hitting lows of 88.20 on the day.
• In Europe we saw Greek Prime Minister Papandreou meet both with Sarkozy and Angela Merkel on separate occasions. Sarkozy said that they cannot allow the Euro to fail and will thus help Greece if needed, however Germany’s Merkel did not make any commitments to Greece and said that Greece has not asked for financial aid yet. The new austerity plans were all approved by Greek parliament despite fierce opposition from the labor unions. EURUSD price action on Friday was between 1.3527 – 1.3682.
• Today’s financial calendar is a light one with the main reports coming out of Europe. First up we have the Sentix index expected to decline to -9 followed by Germany Industrial output, expected to grow by 1% for the month of February. The main focus today will likely be on Greece and official statements from Europe.

Currency to watch out for: EURUSD & USDJPY

• The EURUSD pivot point is at 1.3620 with a preference to enter into long positions at 1.3630
• The USDJPY pivot point is at 89.80 with a preference to enter long positions at 89.85

Today’s calendar and market movers:

• Euro Zone Sentix Index for March expected at -9
• Germany Industrial Output expected to grow by 1%

Equity Markets:

• US equities closed positive yesterday with the DJIA and the SP500 closing 1.17% and 1.48% respectively. The European bourses were positive yesterday with the FTSE up 1.31% the DAX and the CAC closing positive at 0.00% and 2.14% respectively. The NIKKEI and the HSI at the time of writing is 2.09% and 2.18% respectively.

U.S. Dollar Trading (USD) was strong initially after the February Payrolls beat expectations at -36k vs. -56k forecast. The gains were short lived however as stock markets extended gains and yen crosses staged major short covering rallies. Also of note, February Consumer Credit turned positive at 5bn vs. -4.2bn forecast. In US stocks, DJIA +122 points closing at 10566, S&P +15 points closing at 1138 and NASDAQ +34 points closing at 2326.

The Euro (EUR) tested the lower 1.35 region immediately after the Jobs figures were released before rebounding in the US close on EUR/JPY buying and a strong rally in Oil. January Factory orders jumped 1.7% vs. 1.4% forecast. Overall the EUR/USD traded with a low of 1.3529 and a high of 1.3629 before closing at 1.3624. Looking ahead, March Sentix forecast at -9 vs. -8.2 previously.

The Japanese Yen (JPY) was the major loser in the post NFP rally as the market heavily long the Yen liquidated positions. GBP/JPY led the crosses higher as USD/JPY reclaimed the key Y90 level and US stock markets rose to fresh year highs. Overall the USDJPY traded with a low of 88.99 and a high of 90.58 before closing the day around 90.30 in the New York session. Looking ahead, January Current account forecast at 1.25T vs. 1.1T previously.

The Sterling (GBP) like the Euro tested the downside after the NFP figures although support under the 1.5000 proved solid and GBP/JPY soared. EUR/GBP tested the Key 0.9000 level and closed just below the figure but the GBP outlook is quite uncertain as ongoing hung elections fears remain in play. Overall the GBP/USD traded with a low of 1.4994 and a high of 1.5166 before closing the day at 1.5144 in the New York session. Looking ahead, MPC member Barker speaks.

The Australian Dollar (AUD) did well in the ‘risk on’ environment but stalled at the 0.9080 resistance area as AUD/NZD selling capped the Aussies gains. NZD/USD outperformed the major currencies gaining 3% against the Yen. Overall the AUD/USD traded with a low of 0.8986 and a high of 0.9092 before closing the US session at 0.9080.

Oil & Gold (XAU) kept inside Thursday’s range tracking the USD strength and weakness. Some analysts are uncertain as to whether a rebound in the Euro on calming Greece fears will play out well for gold as recent gains have been attributed in part to sovereign risk. Overall trading with a low of USD$1127 and high of USD$1141 before ending the New York session at USD$1135 an ounce. Crude Oil rallied with improvement in global economic outlook. Crude Oil was up +$1.58 ending the New York session at $81.70.

TECHNICAL COMMENTARY

Euro – 1.3630

Initial support at 1.3552 (Mar 4 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3736 (Mar 3 high) followed by 1.3788 (Feb 17 high)

Yen – 90.40

Initial support is located at 87.74 (Dec 10 low) followed by 87.37 (Dec 9 low). Initial resistance is now at 90.96 (0.5 of 93.77-88.14) followed by 91.90 (Feb 22 high).

Pound – 1.5130

Initial support at 1.4959 (Mar 3 low) followed by 1.4855 (Mar 2 low). Initial resistance is now at 1.5136 (Mar 4 high) followed by 1.5209 (Mar 1 low).

Australian Dollar – 0.9070

Initial support at 0.8979 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9086 (Mar 3 high) followed by 0.9147 (Jan 21 high).

Gold – 1135

Initial support at 1125 (Mar 4 low) followed by 1111 (Mar 1 low). Initial resistance is now at 1144 (Mar 3 high) followed by 1161 (Jan 11 high).

Oil – 81.80

Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).