Hirose News|May 7, 2012 11:49 AM

FX Weekly Update




Report for the month of April showed that NFP increased by 115 thousand jobs, missing the expectation for 160 thousand.  The dollar was sold against the yen to 79.82.  Speculators who have expected for this tried to take their profit at 79.80, but since they couldn't make it, they closed their sell positions at less-profitable level.


As for the jobs report, unemployment rate in the U.S. slid to 8.1% from the expected 8.2%, and NFP last month was corrected upside, to a certain degree the dollar was bought after release of the report.  Moreover, since the highest before the report was at 80.30 and stop orders were placed above this level, the greenback was pushed to 80.40 by the execution of stop order.  After this rise, however, the dollar fell to 79.80 and the rebound made no difference on this.  Net short of the yen has been dropped from 55903 to 50173 contracts, but still quite a number of net short contracts exist.  Dollar buying for stop loss will easily show up if the dollar falls versus the yen.


The dollar is now heavy after reaching to 90 days MA at 79.835.  Speculators selling the greenback based on the news that U.S economy recovery runs into difficulties and low interest rate caused by expectation for QE3 is going to increase.  Although there is no significant fall on last Friday in NY market, the dollar is likely to be sold because it is heavy and no BOJ's intervention is expected.  In the coming week, the estimated highest and the lowest is at 81.00 and 78.379 (200 days MA).


Expected Range: 78.35 - 81.00  Sell the dollar on rallies.







Anticipation of Sarkozy's failure gives negative effects on the euro and Greece may also come off the euro after the final election on May 6.  While Greeks have so much resent on the austerity policies, "Greece have to respect the commitments otherwise there will be consequences" the German Minister of Finance Wolfgang Schauble said, the market keeps paying attention to Greek's decision.  These kinds of news make negative impact on the euro for sure.


Furthermore, as French candidate Hollande's attitude to Greece has been different and has outlined 20 billion euros of new spending over five years, sound finance for France will fall back and the rate of bonds will be decreased, which may lead to sell of the euro.


Even if we look at the daily chart, although the descending triangle with a top at 1.3485 give support at 1.3000, if the euro fall below the low limit of daily Ichimoku cloud and 1.3000, it will slide further to 1.2850.  There is a need to sell the euro versus the greenback technically, though the result of Greek and French election will affect the market as well.



Expected Range: 1.2850 - 1.3180  Sell the euro at 1.31's

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