If You Trade FX, You Should Be Focused On This Report

Despite strong economic
data from US
the euro refuses to budge, holding the 1.2200 with a
vengeance in early European trade tonight. Nevertheless, the 1.2250 mark
remains a formidable barrier as the pair failed to break that level for the
4th time in a month.

On the economic front neither the strong ISM Manufacturing data out of the
US nor the improved Euro-zone unemployment rate which slipped to 8.7% from
8.8% had much impact on the pair. All eyes in the FX market are now focused
on Friday’s Non-Farm Payroll report which may determine if the latest batch
of positive US data is a true sign of US economic health or simply peak
growth values in a soon to come US slowdown. If the NFPs do print above
consensus then the FX market will start to price in a 4% Fed funds rate
which will be bullish for the dollar and will likely cap this week’ s euro
rally. For now the pair appears to be tightly boxed in between 1.20-1.22 as
both bulls and the bears await the results.  

Meanwhile in Japan, the yen has decoupled from
the rising price of oil after BOJ Governor Fukui, reaffirmed his stance that
the country has left the “soft patch” behind. USD/JPY fell through the
112.00 barrier reaching a low of 111.30. Despite Mr. Fukui’s assurances we
continue to believe that the yen will not be able to stage a sustained rally
until crude recedes from its highs. With oil now trading within 50 cents of
the $62 handle the pressure on the yen remains in place.

Boris Schlossberg

Boris Schlossberg serves as Senior
Currency Strategist with Forex Capital Markets in New York, the largest
retail forex market maker in the world. He is a monthly contributor to SFO
Magazine with articles focused on understanding proper risk management,
trader psychology and true market structure. He is also a featured expert at
www.fxstreet.com and a frequent commentator for the Marketwatch From Dow
Jones Currency and Bond Report sections.