Forex Technical Update

Positive NFP: The US Non-Farm Payroll data came in better than expected. According to Forexfactory, the consensus was 123K after a 142K month in September. The September data was revised up to 148K, and the October data came in at 171K. Unemployment rate edged back up slightly from 7.8% to 7.9%. This is a risk-on release, but the USD still gained against most currencies especially against JPY and CHF. (USD/JPY reaction). Even though this is risk-on, which normally pressures the USD, the fact that it is a US release that is driving the positive sentiment gives USD strength, which is the winning factor right now.

Loonie: There was Canadian jobs data as well. Unemployment rate remained at 7.4%, and employment change came in 1.8K missing forecast of 9.5K. This was not impressive, but was overshadowed by the very positive jobs data from its neighbor, which gave it strength. A stronger US recovery is positive for Canada because they are major trading partners.

Yen: Risk on is shown in Japanese yen crosses where the initial reaction was yen-negative. This is most apparent in the USD/JPY, seen a couple of charts down.

The USD/CAD has been retreating from parity (1.00), but accelerated the decline after the NFP, showing that its giving CAD more strength than USD. This is probably due to the safe-haven nature of the USD which makes risk-on events negative for the USD. The RSI in the 4H chart below is falling below 40, a sign it is losing the bullish momentum established in October. The next pivot appears to be in the 0.9880-0.9890 area.

USD/CAD 4H chart 9:05AM EDT 11/2/2012

usdcad11022012h4

USD/JPY on the other rallied sharply right after the NFP, continuing a bullish trend that started in October and pushing to a 6-month high:

USD/JPY 11/2/2012 4H chart

CAD/JPY: With the CAD so strong and JPY so weak, you can imagine a big rally in CAD/JPY. It has been coming off a breakdown of a rising trendline. However, in the pullback process, the market was not able to confirm the breakout. The reaction after the NFP further shelves the bearish outlook. The focus is on the recent resistance pivot at 81.41.

CAD/JPY 11/2/2012 4H chart

Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Comments

Please login to comment. Dont have an account? Register

  1. sarbe
    avatar
    Rating 0
    Commented: November 2nd, 2012
    Hello Fan, yes, it was a excellent session this morning to start november, looks like Sandy did not make so much damage to the U.S economy, and still is growing, but in any case looks some weak when you considerer others indicators like GDP and debt. But steady economic enviroment. I have to watch more closely the CAD/JPY, as you say, had a excellent perfomance this morning. Although, my favorite is the GBP/AUD, looks for this closed session had a retracement after a short downtrend in the first hours. Have a nice weekend Fan. Sarbe.

Please login to comment. Dont have an account? Register