Non-Farm Payrolls Set To Create Major Market Volatility Today

The euro fell against several of its main currency rivals yesterday, after EU growth forecasts were lowered and speculations came about that the ECB was considering a cut in euro-zone interest rates. The news also weighed down on the price of crude oil, which fell more than $1 during mid-day trading. Today, all eyes will be on the US Non-Farm Employment Change, set to be released at 13:30 GMT. Analysts are predicting that hiring in the US decreased significantly in November. If true, it may be taken as a sign that the US economy is weakening, which could lead to dollar losses during afternoon trading.


Economic News

USD - NFP Data May Lead to Dollar Losses

Risk aversion in the marketplace due to decreased euro-zone growth expectations helped the US dollar gain against the Swiss franc during afternoon trading yesterday. The USD/CHF advanced more than 40 pips to eventually trade as high as 0.9301 before staging a slight downward correction. Against the safe-haven Japanese yen, the dollar saw virtually no gains following a better than expected US Unemployment Claims figure. The USD/JPY spent most of the day unchanged around the 82.40 level.

Today, dollar traders can expect heavy volatility following the release of the US Non-Farm Payrolls (NFP) figure at 13:30 GMT. The NFP is widely considered the most significant event on the forex calendar and its impact it typically felt throughout the marketplace. At the moment, analysts are forecasting that the indicator will come in around 90K, which if true, would be substantially less than last month's 171K. Any worse than expected data is likely to lead to losses for the dollar before markets close for the weekend.

EUR - EU Growth Fears Weigh Down on Euro

The euro took losses against its safe-haven currency rivals during afternoon trading yesterday, after a decrease in euro-zone growth forecasts led to risk aversion in the marketplace. Against the US dollar, the common currency fell close to 100 pips to trade as low as 1.2980, not far from a 1-week low. The EUR/JPY dropped more than 90 pips throughout European trading, eventually reaching as low as 106.85, its lowest point in six days.

Turning to today, in addition to the all-important US Non-Farm Payrolls figure, euro traders will also want to pay attention to a speech from ECB President Draghi, set to take place at 10:00 GMT. Speculations that the European Central Bank is considering cutting euro-zone interest rates to boost growth were a significant factor in the euro's bearish movement yesterday. Any mention of an interest rate cut today may cause the euro to extend its bearish movement before markets close for the weekend.

Gold - Gold Remains Within Reach of 1-Month Low

After hitting a one-month low earlier in the week, gold prices saw little movement during European trading yesterday. A lack of progress in US budget negotiations combined with worries about a slowing down in the euro-zone economic recovery kept the precious metal around the $1695 an ounce level for most of the day.

Today, gold traders will want to pay attention to a speech from the ECB President, set to take place at 10:00 GMT. Should the speech signal a further slowing down in the euro-zone economy or hint at a future EU interest rate cut, the price of gold could take additional losses during mid-day trading.

Crude Oil - Risk Aversion Weighs Down on Crude Oil

The price of crude oil fell by more than $2 a barrel yesterday to reach a one-week low, as investors shifted their funds to safe-haven assets following a decrease in euro-zone growth forecasts. The commodity had fallen as low as $85.81 a barrel by the end of European trading.

Today, oil traders will want to pay close attention to the US Non-Farm Payrolls figure, set to be released at 13:30 GMT. If the NFP figure comes in below its expected value, it may lead to speculations that demand for oil in the US could decrease which may lead to a further drop in prices.

Technical News

EUR/USD

The Williams Percent Range on the weekly chart has crossed over into overbought territory, signaling that a downward correction could occur in the coming days.

Furthermore, the MACD/OsMA on the same chart appears close to forming a bearish cross. Opening short positions may be the smart choice for this pair.

GBP/USD

While the MACD/OsMA on the weekly chart has formed a bearish cross, most other long-term technical indicators place this pair in neutral territory. Taking a wait and see approach may be the best choice at this time, as a clearer picture is likely to present itself in the near future.

USD/JPY

The Slow Stochastic on the weekly chart has formed a bearish cross, indicating that a downward correction could take place in the coming days. Furthermore, the Williams Percent Range on the same chart has crossed over into overbought territory. Opening short positions may be the best option for this pair.

USD/CHF

A bullish cross on the daily chart's Slow Stochastic is signaling that an upward correction could occur in the near future. This theory is supported by the Williams Percent Range on the weekly chart, which has fallen into oversold territory. Opening long positions may be the best choice for this pair.

The Wild Card

NZD/CAD

The Relative Strength Index on the daily chart is approaching the overbought zone, indicating that a downward correction could occur in the near future. This theory is supported by the Slow Stochastic on the same chart, which is close to forming a bearish cross. Opening short positions may be the wise choice for forex traders today.