Currency Trading Market Daily Fundamental Analysis – May 5, 2014

Currency Trading Market Fundamental Analysis - May 5, 2014

The US dollar had a volatile trading run in the currency trading market since Friday when the non-farm payrolls report came in stronger than expected. The economy added 288K jobs in April, higher than the estimated 216K gain. The previous month’s figure was also revised to show a stronger pace of hiring for March, enough to bring the jobless rate down to 6.3%. However, components of the report revealed that the decline was mostly spurred by a dropping participation rate, suggesting that there’s still significant slack in the jobs market. Wage growth stagnated for the month of April as well. US ISM non-manufacturing PMI is due today and the index could hold steady at 54.2.

The euro moved back and forth to the dollar on Friday’s currency trading market but failed to make significant headway in either direction. Data from the euro zone was mixed, with the jobless rate and Italian manufacturing PMI beating expectations while the Spanish manufacturing PMI fell short. Euro zone Sentix investor confidence data and EU economic forecasts are on the docket today.

The pound suffered a quick selloff to the dollar but staged a strong rebound in an instant, after the NFP results were published. UK construction PMI was weaker than expected at 60.8 versus the estimated 62.2 reading. For today, UK banks are on holiday in observance of May Day so pound pairs might be in for a bit of consolidation with no data points up for release as well.


Currency Trading Market Updates

The comdolls lost a bit of ground to the dollar on Friday but capped off the week with a decent recovery. Australia reported a 3.5% decline in building approvals, along with a downward revision in the previous month’s figure. China’s HSBC final manufacturing PMI was revised lower to 48.1 from 48.3, leading to more selling pressure for the Aussie. No other reports are due from the comdoll economies for the rest of the currency trading market day.

Meanwhile, the franc regained ground on Friday as Swiss SVME PMI printed stronger than expected results. The index jumped from 54.4 to 55.8, outpacing the consensus at 55.1. This reflects a stronger expansion in the manufacturing industry, which could lead to better growth prospects. There are no reports due from Switzerland today.

The yen tossed and turned to the dollar last week but started this week on a strong note, despite Japanese traders being off on a holiday. There are no reports due from Japan today and tomorrow, but it appears that positioning from institutional traders is affecting yen movement in the meantime.

To contact the reporter of the story: James Brennan at

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.