Posted: 05 Jun 2010 02:00 AM PDT

After the whopping Non-Farm Payrolls, the new week starts slowly but becomes intense later on. Rate decisions from New Zealand, Europe and Britain, and American retail sales and consumer confidence are the highlights among other events. Let’s see the major market movers this week.

European news has been slower in the past week, with no major credit downgrades or depressing statements. But the crisis is far from over. Traders understand that the austerity measures that flood the continent are a serious damage to growth. These worries can be reflected in the European rate decision. OK, let’s begin:

American Beige Book: Published on Wednesday at 18:00 GMT. Two weeks before the FOMC meeting that decides on the rates, this report about the current economic conditions will shed some light on the state of the US economy, and might provide hints for the rate decision, now that some members are expressing the need to raise the rates.
New Zealand Rate decision: Published on Wednesday at 21:00 GMT. The RBNZ will probably be the third Western central bank to raise the rates. In his previous rate decision, Alan Bollard hinted about raising the rates. Fundamentals in New Zealand have been stabilizing. While they haven’t been superb, this could be enough to follow Australia and Canada and raise the Official Cash Rate from 2.5% to 2.75%. It’s important to notice the rate statement that accompanies the event.
Japanese Final GDP: Published on Wednesday at 23:50 GMT. More bad news is expected in Japan after the resignation of the government. GDP for the first quarter will probably be revised to the downside – from 1.2% to 1.1%, pushing the yen lower.
Australian employment data: Published on Thursday at 1:30 GMT. Australia continues to enjoy economic growth and has a good outlook for the future. This will probably be reflected in another gain in jobs. Australian employment change is expected to rise by 16K and the unemployment rate is expected to remain unchanged at 5.4% – lower than most countries.
British rate decision: Published on Thursday at 11:00 GMT. Mervyn King, head of the BoE continues to face a dilemma – on one hand, inflation continues to pick up, making a rate hike necessary, but the fragile state of economy, that hardly emerged from the recession, means leaving the stimulus measures unchanged. King dismissed inflation so far. Consensus is for another month of unchanged rates – 0.5%. It’s important to watch the MPC Rate Statement. Any concern about inflation could boost the Pound.
European rate decision: Published on Thursday at 12:45 GMT. Jean-Claude Trichet of the ECB faces a similar problem, but in Europe the inflation is softer and the economic issues are harder, making it easier for him to leave the European Minimum Bid Rate unchanged. There are even calls for lowering the 1% interest rate. His words regarding the debt issues and the economy in general at the press conference (45 minutes later) will also shake the markets.
American and Canadian Trade Balance: Published on Thursday at 12:30 GMT. This double-feature release of the trade balance in both countries always shakes USD/CAD. The Canadian surplus is expected to rise to 0.7 billion, while the American deficit is expected to remain almost unchanged around 40 billion.
American Unemployment Claims ublished on Thursday at 12:30 GMT. The first release of jobless claims after the whopping Non-Farm Payrolls is expected to be rather stable – a drop from 453K to 447K, still within the same range that this weekly indicator showed us in recent months.
American Retail Sales: Published on Friday at 12:30 GMT. Sales volume is advancing steadily. The pace of growth is expected to ease this time, from 0.4% last month to 0.2% this time. Also core retail sales, which are closely watched by the Federal Reserve, are predicted to slow to 0.1% from 0.4% last month.
American Consumer Sentiment: Published on Friday at 13:55 GMT. The last event of the week is very important – consumer sentiment is expected to edge back up from 73.6 to 74.9, indicating that the drop we saw recently was only temporary. The university of Michigan publishes this preliminary report close to the market’s close, in a very volatile timing.

That’s it for the major events for this week. Specific currency updates will follow.

Further reading:

For the Euro/Dollar, look into the EUR USD Forecast.
For the British Pound (sterling), read the GBP/USD forecast.
For the Australian dollar (Aussie), check out the AUD/USD forecast.
For the New Zealand dollar (kiwi), read the NZD/USD forecast.
For USD/CAD (loonie), check out the Canadian dollar forecast.

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Forex Links for the Weekend

Posted: 04 Jun 2010 02:00 PM PDT

After an exciting Non-Farm Payrolls release, it’s time to sit back and relax with some long-term articles. Here are my forex-related picks. Enjoy:

Andrei composed a list of top inactive forex blogs that are missing on the scene. I hope they will return as well. This was written after I’ve updated my list of top 10 forex blogs.
Casey Stubbs lays out the rules for setting up a forex trading journal.
Larry Greenberg looks back to the past and measures the effect of Japanese PMs resignations on the yen, following this week’s turmoil.
Macro Man dives into a sometimes overlooked issue in the UK – inflation, and the growing pressure to raise the rates in Britain.
James Chen explains how to trade forex with divergences, and sheds some light on all those oscillators.
James Wooley provides a live trading example of using Fibonacci extensions and projections.
Jay Norris discusses the subject of team work in trading.
Michael Greenberg reports of a new broker coalition, coming from the 16 leading dealing banks. This is another response to the proposed CFTC regulations.
Francesc Riverola reports that 85% of traders are losing in the Forex Trader of the Year Demo Contest. Another reason for using a forex demo account.

That’s it for now. Have a great weekend!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Non-Farm Payrolls Fall Short – Dollar Rallies

Posted: 04 Jun 2010 05:36 AM PDT

The American job market gained 432,000 jobs in May, weaker than 524,000 that were expected. This disappointment is mostly due to weak hiring in the private sector. The unemployment rate fell to 9.7%, which is marginally better than predicted, but comes due to drop of people out of the available labor force. These results triggered risk aversive trading – EUR/USD reached 1.2016 following the release, before bouncing back to 1.2040.

Most of the rises are due to hiring in the public sector, as expected. The decennial census in held in May created lots of public jobs during the months that preceded the census, and the hiring reached a climax in May. But other components weren’t so good:

The disappointment comes from the private sector – only 41,000 jobs were gained there. This “core” figure is very far from a gain of 180,000 jobs that was predicted. Also the better-than-expected drop in the unemployment rate is due to the dropout of 322,000 people out of the available work force. No good news here as well.

EUR/USD didn’t wait for the Non-Farm Payrolls – it began the move down more than an hour before the release. Apart from tensions towards the Non-Farm Payrolls, the Euro suffered from the expiry of double-no-touch options in huge amounts. The reportedly locked the pair between 1.21 and 1.25.

The other reason for the Euro’s fall is the situation in Hungary. The Hungarian Prime Minister issued a statement that the economic situation is “grave”, blaming the previous government for covering up the real situation. Hungary doesn’t use the Euro, but it’s a member of the EU, and more importantly, it owes lots of money to countries and banks in Western Europe.

This risk aversion sent the Japanese yen higher as well. USD/JPY made a nice fall. The other majors and minors surrendered to the dollar, and played the classic risk aversion game, similar to the Euro – AUD/USD, NZD/USD, and GBP/USD are falling. USD/CHF and USD/CAD are on the rise.

Update: EUR/USD fell below 1.20…

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