Non-Farm Payroll is a force to be reckon with...

The day is finally here where the last piece of puzzle fits in place and lets us have a clear picture of what's the Fed going to decide on next Tuesday regarding the interest rates. Futures traders are now placing only 20% that the Fed will raise interest rates dismissing the economic growth and fight inflation now rather than let it grow. Well, I'm with the other 80% says that the Fed will stop.

The crucial data today, Non Farm Payroll indicating only 113,000 new jobs last month, fewer than expected, and this pushed the jobless rate up to 4.8% from the 4.6% reported in June. Experts believe the economy has shifted down a gear after a strong first quarter, with house sales cooling. This has caused the dollar dropped to a two-month low against the euro and fell versus the yen. My trade is now profitable and I took another trade at 1.2906 with 868 units. I'm looking forward Euro to consolidates at 1.29 zone on Monday and a pause on Tuesday will bring Euro to AT LEAST 1.30.

Things are pretty cool now as my estimated profit this week has gained to at least 250 pips profit. These numbers are gathered on different trades. Gold prices are increasing again and chances are it going up again is high if the Fed is pausing interest rates. I'm expecting gold to reach 670 on Tuesday when the Fed is expected to pause. Forex is great!

ECB & BOE Hikes Interest Rates...

Bank of England gave a surprise hike today with 25 bps bringing the interest rates to 4.75% today. So does the RBA (Reserve Bank Australia) & the ECB (European Central Bank) made the move of 25 bps as well. GBP/USD pair managed to climb and maintain 100 pips higher after the release. However, things are not looking good for the EUR/USD as the pair gave back all the gains made after the interest rate hike. Chances are traders are expecting a stronger than expected NFP report due tomorrow. US Service Industries (ISM Non-Manufacturing Index) expanded at a slower pace in July as orders dropped to the lowest in more than three years and costs climbed. The Institute for Supply Management's index of non- manufacturing businesses including banks, builders and retailers fell to 54.8 from 57 in June. Readings above 50 point to growth, and the index has averaged 57.8 since its inception in 1997. Rising interest rates are weakening the expansion in services, such as real estate, which account for 88 percent of gross domestic product. The figures suggest the Federal Reserve is close to achieving what it set out to do when policy makers began raising rates more than two years ago: cool growth without stalling the economy. New orders at U.S. factories rose a smaller-than-expected 1.2 percent in June as orders outside transportation and defense were weak, a government report showed on Thursday.

Euro start to gain when US Jobless Claims rose 14'000 last week to 315'000, higher than the market expectations of 310'000 and the previous week of 298'000. Soon after that ECB President Jean-Claude Trichet gave mild-hawkish remarks saying that the Eurozone is still very accomodative and future hikes will depend heavily on economic data. This has bring Euro to 1.2833, the high of almost similar for the past 2 days which serves as a big resistance to the pair. I took a trade at 1.2787 for EUR/USD with 1996 units. My analysis on the NFP tomorrow would be another weak number signalling weaker employment growth. Hourly earnings however will mostly maintain of what was reported last month, a number of 0.5% or less. I'm still holding on the this trade I made making a bold judgement that the Federal Reserve will pause next week.

US continues consolidation...

Inflation data released showed accelerated pace in inflation. Growth is slowing down reported by the quaterly GDP. What would the Fed do? I'm still betting on a pause. I'm not trying to be one-sided here but I sincerely feels that the Fed is now weighing more on the economy growth rather than inflation which they've raised interest rates consecutively for the past 17 months. My trades were closed on a stop loss earlier in late Asian Session when USD is gaining over the major crosses and particularly Euro due to the rumor speculations that the European Central Bank will not raise interest rates over 3% this year. I've not taken any trades at the moment because I won't be here to look after it as I'll be travelling to other state tomorrow. However, I'll be looking forward to place a trade after the ECB rate announcement that could possibly lead to Euro dropping due to the priced in effect which happens to almost all currency and the push could be a 'vigilant' speech from ECB President Jean-Claude Trichet. I'm now sidelined for the moment, at least for the next 24 hours. Happy Trading Everyone.

Mixed Market With Confused Market.

This week started off somewhat in a interesting manner with traders of bulls and bears are dumping yards of cash into the market. For USD bears like yours truly, I'm still holding on my trades from last friday as hopes of interest rate hike expectations from the Federal Reserve are slowly fading and the major lot of economists and traders are pricing in the hike pause on the FOMC meeting next week. For the dollar bulls traders, they are somehow hoping for a miracle that the Fed will raise interest rates next week, not to mention that the chances are dim now but even with a rate hike, it will be a last one and from my anaylsis, it's gonna be bearish USD as well. Not a doubt for me.EUR USD is currently challenging a declining rendline drawn off the June high. The interesting feature in the coming sessions will be whether the bulls are able to lift the pair above this resistance at US$ 1.2785. As long as the pair trades below this line, the intervening peaks will show a descending tendency.

From the Eurozone today, as expected, Monthly German Retail Sales in June rose to 1.9% vs. -0.4% in May. The consensus was 1%. The rise was the biggest since January and came after May's 0.4% fall. But the year-on-year figure showed a 0.4% drop. Frankly speaking, I was expecting a higher than consensus number as June, is the starting of the World Cup 2006, and it's in Germany. If the retail sales fell, someone please contact the Internal Affairs or the anti-corruption unit or whatever because there's definately some corruption within the government. Europeans' confidence in the economy unexpectedly rose to the highest in more than five years in July and inflation ran at the fastest clip since October, strengthening the argument for the European Central Bank to increase interest rates this week. An index of sentiment among executives and consumers in the dozen euro nations increased to 107.7, the highest since March 2001, from a revised 107.1 in June, the European Commission said today in Brussels. Consumer prices rose 2.5 percent from a year ago, the 18th successive month the rate of increase topped the ECB's target of just below 2 percent. This should be an additional pressure for the European Centrla Bank to increase their benchmark interest rates to 3% this week from 2.75%.

For the US data, Chicago Purchasing Manager's Index rose higher than expected as businesses expanded production to meet demand, a private survey showed. its regional index rose to 57.9 this month from 56.5 in June. A reading greater than 50 signals growth. The report is in line with broader U.S. data, such as increasing orders for durable goods, that show rising profits are spurring demand for business equipment and leading companies to increase production. Manufacturing growth is expected to help support growth this year as consumer spending softens and the housing market cools, economists said. Boosting uncertainty, St. Louis Federal Reserve Bank President William Poole said Monday he feels evenly split about the need for an 18th consecutive interest-rate hike at the Fed's meeting next week. This has caused the market with a confused mind on which side they should be on. I certainly know mine and I would bet heavily on it.

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Existing Trade
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Long EUR/USD @ 1.2680 with 1955 units. Stop loss placed at 1.2730 securing 50 pips profit or $9.77.

Gold is somehow becoming stronger but the price action from today is pretty mixed as well due to the interest rates expectations. A pause would bring the gold back to 660 range again. I'm expecting the whole weeks to be mixed, but somehow 1 side of traders will run out of steam. I certainly hope Euro will take a lead to break 1.30 this time. It's been so long!