Forex for the week of February 10, 2014 – Too Soon To Panic?
The Forex markets had the non-farm payroll announcement to ponder over the course of the last week, and as a result there was a lot of action on Friday. The number came out much weaker than anticipated, causing a lot of chaos during the session. The EUR/USD pair shot higher, although a lot of the “risk on” moves returned by the end of the session on Friday to make it appear that all is well. This could be a sign that the markets believe there was a bit of a weather-related factors that may have influenced the reported numbers.
The EUR/USD continues to be stuck between the 1.35 level on the bottom, and the 1.38 level on the top. We think this will continue, so short-term traders will continue to be the focus of the market as the moves will reflect a lot of tension, but no real conviction. If the non-farm report didn't cause a break out – not much will at the moment.
Another market that is interesting to us at the moment is the USD/JPY pair. Normally, this pair will go up and down with the jobs number in America. However, it actually went higher by the end of the session. This tells us that the pair wants to go higher. With this, we are now very bullish of this market, and think that the candle for Friday is indicative of a market that is eventually going to aim for the 105 level again.
The precious metals markets continue to be unimpressive, and with that we think the markets in general are “stuck” as far as trying to figure out the overall direction of risk. However, the silver markets seems to have a “base” being formed at the $19 level, so we think sooner or later they will be a buy. Above $20.50 has us buying hand over fist, as the market should go to the $23 level without too many issues. Buying physical silver probably isn't a bad idea in the meantime though, as it takes leverage out of the trade, but keeps exposure.
Monday – Chinese Trade Balance
Tuesday – Fed Chair Yellen speaks in front of Congress
Wednesday – UK Inflation Report, Australian Employment Change/Rate
Thursday – Chinese CPI
Friday – USA Consumer Sentiment