U.S. Dollar Trading (USD) the dollar struggled as optimism overflowed overnight and traders dumped the safe haven and for riskier currencies. The risk rally began in Asia on speculation that Greece will get the required PSI involvement in its debt swap deal and later when this was confirmed we saw a global stock rally ignite. US Non farms tonight provide another spotlight on the US economic recovery with recently data improving. Looking ahead, February Nonfarm Payrolls forecast at 210k vs. 243k previously. The Unemployment rate is forecast steady at 8.3%.

The Euro (EUR) the positive news continued to roll in with the final bond swap take up looking to approach 95% and the EUR/USD took advantage to rally to 1.3280. The ECB held at 1.0% as expected and little was added from the press conference. The outlook is mixed with the USD gaining in recent times when Nonfarm payrolls beat expectations with the improving US jobs market changing the FED’s tone on potential QE3. Another solid US Nonfarm payroll figure tonight will provide more data for this emerging trend. The Sterling (GBP) the GBP/USD rallied but at a slower pace than most majors with EUR/GBP buying weighing on the Pound. The BOE held rates at 0.5% and kept Asset Purchase Program at 325bn as widely expected. The outlook will depend on the stock market and general risk appetite but has a good chance to test higher with the mood improving dramatically overnight. Looking ahead, UK January Industrial Output forecast at 0.3% vs. 0.5% previously. Also German Trade Balance forecast at 13.5bn vs. 13.9bn previously.

The Japanese Yen (JPY) the USD/JPY rallied to Y81.70 before stabilizing at the Y81.50 for the rest of the trading day with traders ready for tonight’s US data and large impact it can have on the data sensitive pair. Many traders look to trade the US non farms data exclusively through the USD/JPY with price action much easier to predict. Australian Dollar (AUD) the Aussie shrugged off the poor February Employment data of -15k to rally past 1.0600 into Asia and 1.0670 in the US session. The AUD/USD direction is primarily decided by the daily stock market movements and much to the bemusement of fundamental traders will move higher even if local data is terrible when stocks are in an uptrend. Looking ahead, January Trade Balance forecast at 1500mn vs. 1709mn previously. Also China February CPI is forecast at 3.4% vs. 4.5%.

Oil & Gold (XAU) Gold is grinding higher break above $1700. OIL/USD was bound in a $106-$107 range overnight with the equity rally not the prime mover in energy markets lately.

Pairs to watch

USD/JPY Traders waiting for US jobs, Y81.80 resistance

EUR/USD 1.3300 the next target

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3056

1.3096

1.3265

1.3309

1.3380

USD/JPY

80.02

80.59

81.55

81.87

82.23

GBP/USD

1.5645

1.5722

1.5825

1.5876

1.5993

AUD/USD

1.0476

1.0527

1.0645

1.0696

1.0744

XAU/USD

1656.00

1683

1701

1709

1726

OIL/USD

105.00

106.00

106.70

107.00

108.00