Two dangers exist today in the broad markets that traders can take advantage of or be taken advantage by. The jobless numbers and the Russia/ Ukrainian situation. The Non-Farm Employment Change numbers will come from the U.S. in the afternoon (for European investors) and this is the short-term focus certainly. However, the political situation in Eastern Europe is a mess and developing rapidly and must be watched.
The jobless number is estimated to be 151K from the States today. But be on the look out for the Official Unemployment Rate number too. The U.S. government has been trying to ‘sell’ good news by highlighting the good unemployment rate figure and disregarding the Non-Farm Employment Change results the past few months. Real unemployment is a major problem. Other data from the U.S. has not been great lately either. While the U.S. is certainly not China, there is a growing contingent of analysts looking over statistics from the States and wondering if numbers are being fudged (in other words manipulated) to create an air of stability.
Given that retail and manufacturing readings from the States have been lacklustre in recent reports, we do not expect that the Non-Farm Employment Change numbers will exceed expectations.
The EUR as of this morning is near highs and testing the upper reaches of its resistance levels. The ECB can be none too pleased about this. Gold is trading near 1350.00 as of this morning. Asian bourses have put in a cautious day of trading as they begin to brace themselves for the weekend. FX markets, commodities, and equities could all be volatile as Friday progresses. Risk management will be vital for Forex traders today, a steel stomach would not hurt either due to the potential roller coaster ride that could develop. The Single Currency’s climb upwards yesterday points towards an other interesting day of tests for fans of the EUR/USD cross.
And as we started this article out while the jobless numbers are very important, the Russia and Ukrainian crisis promises to grow in stature. That is because Crimea voted yesterday to vote in ten days time on whether they should leave the Ukraine and join Russia. This would be like Arizona suddenly voting on whether it should leave the States and join Mexico. And it is likely Crimea will actually decide on switching countries meaning that Europe and the States will react too and this will be done with sanctions. But Russia is holding a very important card and it just may be a trump – energy. If Russia starts to face some type of economic sanctions it will surely react by cutting off its cheap energy supplies to Europe. And then real decisions will have to be made politically by all parties.
So while many have said that the Russia/ Ukrainian situation has been over hyped it must be also looked at with all possibilities in mind.
Taking all of this into consideration, the jobless numbers and the Eastern European crisis, Digital Markets Advisor believes the EUR will continue to be volatile and the next few weeks will be action packed. Traders will have to watch ranges very carefully and take into consideration the psychology of the markets which will be both speculative and nervous. The Single Currency is trading near highs and while it may have further to climb in the short-term, risks for the EUR are certainly evident.