Currency Pair Overview

Overall: The currency market gained momentum in the European session after the market practically came to a standstill in Asia. The dollar weakened overnight in-line with the positive equity markets, showing that investors were ready to buy risk, including higher yielding currencies, ahead of the NFP release. That trend continued in N.Y. even as the report showed the economy lost nearly 600,000 jobs. Stocks exploded after word came that the Senate was working on the stimulus plan and was going to hold a vote on the measure late Friday afternoon, which took the dollar lower against the basket of higher-yielders and higher vs. the yen.

The Euro (Eur/Usd) tried again to break below the 1.2750 area, the same level where it bottomed in the last trading day. Soon after, the euro was pulled higher by the rest of the majors, gaining 60 pips from the low of the European session, near the neutral pivot point (1.2815). The pair rose for the first time in 3 days as stocks advanced, looking to close above the 38.2% retrace line of the last downswing between Jan.28 and Feb. 02.

The Pound (Gbp/Usd) touched the first pivot resistance level shortly after the London open and gained 100 pips during the European session. The pair advanced in N.Y. as stocks gained, advancing past the 78.6% retrace of the last down swing between Jan. 16 and Jan. 23.

Factory prices in the U.K. increased for the first time in the last six months. The input prices, or the price at which producers and manufacturers buy materials and fuel, rose in January by 1.5%, more than expected. Output price, or the prices at which manufacturers sell, gained 0.1%. The U.K. manufacturing output decreased in December by 2.2%, compared with analyst expectations of -1.3%, while industrial production dropped by 1.7%, more than the forecasted number

The Aussie (Aud/Usd) advanced near TheLFB R1 (0.6595) in the overnight session and got a huge boost with the S&P and reached its highest level since Jan. 12.

The Australian construction sector increased to 34.1 in January from a 30.9 reading seen during December. Although the reading is higher, it still came in below the crucial 50 level and marks the 11th month of industry contraction. Construction companies in Australia have been hurt by the deteriorating economy and lack of credit availability which has resulted in fewer jobs and job cutbacks.

The Cad (Usd/Cad) rose steadily, about 80 pips, during the European and Asian sessions. However, the pair hit intra-day resistance at TheLFB R1 (1.2395), near the area where the pair topped the last two days. In addition, the pair formed two consecutive doji-stars in the last days of trading, showing market’s indecision. That indecision may have been settled today; the pair looked to finish trading with a bearish pin bar on the daily chart.

The Swissy (Usd/Chf) traded in a small range in the overnight session. The pair fell in N.Y. as Treasury yields rose when traders moved out of government debt and into riskier positions. In the last two days, the swissy has gained almost 300 pips, breaking above important resistance areas.

In January, unemployment in Switzerland rose to 2.9%, as expected. In unadjusted terms, the Swiss unemployment jumped to 3.3% in January, from 3.0% in the period before. Previously the unemployment rate had remained stable for a longer period, near 2.5%

The Yen (Usd/Yen) fell around 40 pips during the Asian session to the neutral pivot point (90.85). However, soon after the London open, the yen regained every pip lost in the early trading session, testing the Asian opening price. Yesterday, the pair rose to a one month high, after having a strong rally during the U.S. session and the trend continued in N.Y. as stocks rallied.