Forex Fundamental Analysis - 01 February 2008



Friday, February 1st, 2008 (4:30 a.m. New York Time) UK
At 4:30 a.m. we will have UK Manufacturing PMI coming out. It is expected to come out at 52.5. Based on past performance, triggers such as 1.4 or 1.5 were not successful. I would use 2.0 trigger on it. If it comes out at 54.5 or higher, you may consider buying GBP/USD and expect 25 pips of a price action. If it comes out 50.5 or lower, you may consider to sell GBP/USD for 25 or 30 pips of a price action.

Friday, February 1st, 2008 (8:30 a.m. New York Time) USA
At 8:30 a.m. we will have U.S. Non-Farm Payroll and the Unemployment Rate. Last month we had 0.2 deviation on the Unemployment Rate. When it deviates by 0.1, it is not that big deal but whenever you get 0.2%, in any country, it is significant and tends to be commanding. If it comes out 5.2%, that would be weakening the U.S. dollar. If it comes out at 4.8%, it would very strengthening the U.S. dollar. The Non-Farm Payroll is expected to come out at 65K to 70K (consensus) but actually the range is even wider. With a bad Initial Jobless Claims today and warnings from the Feds this week about a weak jobs market, people worry that it will be a bad number but at the same time we had very good ADP Employment number two days ago, and lower Initial Jobless Claims in a few weeks in a row before this week. As a result, there is a lot of confusion in the market. I am expecting pretty good moves if we get a tradable trigger. I would trade USD/JPY on this one. If it comes out at 150K or more positive, that would be a clear buy USD/JPY opportunity, looking for 50 to 100 pips in the first hour of the report. If it comes out at 0 or negative, that would be a very clear sell signal on USD/JPY, and you can also expect 50 to 100 pips in the first hour of the report. Watch out for revisions of the prior number as they sometimes can move the market to totally opposite direction. For example, last month it came out at 18K. If this month it came out at 0, but last month is revised to 100K, you may get initial pop down on the 0 number but since last month was revised by over 80K, you will see completely reversal.

Friday, February 1st, 2008 (10:00 a.m. New York Time) USA
At 10 a.m. we will have U.S. ISM Manufacturing Index coming out. There is over 6.0 range on expectations so we will be trading more conservative triggers than usually. I think 2.2 trigger should be enough. If it comes out at 49.5 or higher, I would buy USD/JPY. If it comes out at 45.1, I would sell USD/JPY. If the trigger is hit, I would look for 40 to 50 pips of the price action. If you want to be more aggressive, especially if the U.S. Non-Farm Payroll is muted and it looks like they are waiting for the ISM indicator, than you can try 1.5 trigger so you may want to buy USD/JPY at 48.8 or higher, and sell USD/JPY at 45.8 or lower.



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