The foreign currencies futures open little changed ahead of the key US non-farm data; it’s the calm before the storm. Expectations for a pretty bad report should be built in, so the risk is only for a better than expected reading. The Asia/Pacific stock indexes closed up, with the Nikkei up over 2% on BoJ rumors of further quantitative easing, and the European bourses, oil and gold are up as well. The US stock indexes are trading up in pre-open market.
The short-term outlook is bullish for the European and commodity currencies IF the NFR is bad. As I have taught you for years, if you like to spec on high volatility, perhaps you should wait for the first reaction to the data while checking the previous month’s revision, and then try to get in if a good Fibonacci retracement level holds; speed will be of the key, of course.
The medium-term outlook remains bearish for the European currencies and sideways for the yen and the commodity currencies. My model is long all of the foreign currencies futures except for the pound.
Look for updates on my model’s positions on Twitter: They are free – for now. Then, you will have to subscribe to get the model turns in advance.
Overnight:
Australia: AiG Performance of Construction Index fell to 52.8 in February from 57.7 in the previous month.
Japan: No data
China: Prime Minister Wen Jiabao said Friday his country was seeking an 8% annual growth in GDP, an inflation rate of about 3% and a basically stable Yuan for 2010, the year in which China is set to overtake Japan to become the world's second-largest economy.
Germany: Industrial new orders rose 4.3% month-on-month in January following a decline of 1.6% in December, revised from -2.3%. On an annual basis, factory orders climbed 19.6% in January from the revised December's annual growth figure to 7.3% from 8.4%.
UK: The output price index rose 0.3% in February from 0.4% in January. Output price rose 4.1% year-on-year in February compared to a 3.8% increase in January. This was the biggest annual increase since December 2008. The core output prices rose 2.9% from 2.6% in January. Input prices edged up 0.1%. The input price index rose 6.9% on a yearly basis in February, following January's revised 7.7% increase.
