FOREX Daily Outlook by Easy-Forex.com

ECB hike rates as BoE keep them unchanged. Japanese Yen continues to fund Carry Trade. Heavy data day for US with Unemployment, Trade Balance & Non-Farm Payrolls

CURRENCY TRADING SUMMARY – 09 MARCH 07 (23:30GMT)
                                   

• U.S. Dollar Trading (USD) was mixed against all other majors on Thursday amid key event risks. US Treasury Secretary Henry Paulson’s talk in Shanghai urged the Chinese to open financial markets, in the hope that the nation would be more than an exporter of low-cost manufactured goods, as he warned that growth was becoming increasingly imbalanced. In US share markets, the NASDAQ was 13.09 points (+0.55%) and the Dow Jones also strengthened by 68.25 points (+0.56%). Crude Oil dropped slightly by US$0.07 a barrel to US$61.75. Looking ahead, Friday proves to be a very eventful day for the US beginning with the release of the Unemployment rate later on today. Market expectations are at 4.6% same as previous. In other news, the Trade Balance is also made public with a figure of -59.7 expected, indicating a narrowing of the trade deficit. Finally, Non-Farm Payrolls is also out of US. With such economic data holding key significance to global markets, analysts are forecasting a worse off figure of 100K down on the previous 111K.

• The Euro (EUR) saw the ECB hike rates to 3.75% (as expected) which was then followed by non-hawkish commentary from ECB president Trichet who hinted that inflation in the Euro zone was under control and indicated that policy was on the “accommodative side”. Hence, restricting the possibility of near term rate hike. As the Euro moved higher against the USD on buying last night, it squared off gains by the end of session. Overall, the EUR traded within a range of a low 1.3116 and a high of 1.3182 before closing the day at 1.3134 in the New York session.

• The Japanese Yen (JPY) weakened against the Euro and USD yesterday on the back of the global stock rebound which allowed many investors to re-enter risky bets and look for the carry trade. On a different note, the recent sharp gains of JPY were mentioned during Trichet’s speech as being a consequence of the G7 warnings against JPY weakness. Overall, the JPY traded within a range of a low 115.55 and a high of 117.49 before closing at 117.11 in the New York session.
• The Sterling (GBP) lost ground against the USD following the BoE decision to keep interest rates on hold at 5.25%. Overall, the GBP traded within a range of a low 1.9274 and a high of 1.9353 before closing the day at 1.9290 in the New York session. Looking ahead, Manufacturing Production is out of the UK with expectations to remain unchanged at 0.2%.
• The Australian Dollar (AUD) traded in a tight range hitting levels of a low 0.7753 and a high of 0.7785 before closing the day at 0.7769 in the New York session. 
• Gold (XAU) rose Thursday on the back of stronger global markets and a softer Dollar. Gold rose by US$0.40 an ounce to $653.20. 
• The South African Rand (ZAR) gained against the USD today as a correction to the recent sell-off of risky assets that led the ZAR to 4-months lows.

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