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September 04, 2009

Forex Trading Light as Traders Await U.S. Employment Report
by Brewer Futures Group

The U.S. Dollar is finished mixed on light volume as traders evened up positions ahead of tomorrow's U.S. Unemployment Report. The Dollar opened weaker against most major Forex markets this morning but erased losses as the day wore on. Today's weaker than expected U.S. ISM Services Report helped the Dollar regain some of its losses as this report showed the U.S. economy was still weak. Some traders feel that weakness in the services sector will mean that tomorrow's unemployment report will show more job losses than estimated. Yesterday's ADP employment report was worse than estimated. This too weighed on traders' minds.

The GBP USD opened up strong but gave back some of its gains by the close on position evening. This market has firmed up over the last two days because of oversold conditions and a better than expected U.K. Services Report.

This morning the European Central Bank announced that its benchmark interest rate would remain at 1.0% as expected. ECB President Trichet said that the road to recovery would be "bumpy" while explaining why the central bank is in no hurry to withdraw its emergency stimulus. After an early morning gain, the Euro lost ground to the Dollar and finished lower.

The close in the EUR USD was slightly above a 50% level at 1.4260. Breaking under this level will put the EUR USD on the bear side of a retracement zone. Basically, this market is trading inside of its August range of 1.4447 to 1.4045.

The USD CAD finished the day lower. Steady to lower crude oil and a gain in equity markets helped to support the Canadian Dollar today. Trading was light ahead of tomorrow's U.S. employment report.

The USD JPY closed up on the day. Oversold conditions and a firm stock market helped boost interest in the Dollar after several days of weakness. Position evening ahead of tomorrow's U.S. Non-Farm Payrolls Report also contributed to the Dollar's strength.

Currently the Yen is battling the Dollar for safe haven status. Today's weaker than expected U.S. ISM Services Report helped draw interest back to the Dollar. Tomorrow's report should trigger a volatile move in the USD JPY.

Demand was a little stronger today for the higher yielding NZD USD and AUD USD, but overall these two markets remain rangebound. Yesterday it was reported that the Australian economy grew more than expected but today a report indicated that the trade deficit widened. Exports fell and imports increased because stimulus plans increased domestic demand. Traders are anticipating a rate hike by the Reserve Bank of Australia before the end of the year. Tomorrow's U.S. employment report will dictate whether traders will renew their quest for higher yielding currencies or decide that safety is best.

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DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as "spread" or "straddle" trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

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