Overall, the currency market gained momentum in the European session, after the market practically came to a standstill during the Asian session. The dollar weakened overnight, in-line with the positive equity markets, showing that investors are ready to buy risk, including higher yielding currencies, ahead of the NFP release.
The Euro (Eur/Usd) tried again to break below the 1.2750 area, the same level where it bottomed in the last trading day, but failed to move any lower. 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 Pound (Gbp/Usd) touched the first pivot resistance level shortly after the London open. The pair rose almost 100 pips tonight, all of which came during the European session. The pound is currently trading near a 3-week high, but now faces a very hard test, a trend-line that comes from December 17 2008, the January 08 2009 highs, and the 50-day simple moving average.
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. The real test for the aussie will come at this area, as the pair faces the 20-day simple moving average and an intra-day resistance line. The aussie failed to break above the 20-day SMA in the last 6 weeks.
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.
The Swissy (Usd/Chf) traded in a small range in the overnight session. The pair traded in both the Asian and European sessions near the closing price of Thursday's U.S. session, in a 30-pips channel. 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, down 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, once again, the Asian opening price. Yesterday, the pair rose to a one month high, after having a strong rally during the U.S. session.