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NEWS / Forex Forecasts

USDCHF,USDCAD Dollar is still supported by Friday US labor market survey

12:11 02/08/2006

So, the market players form their trading positions at the turn of two main events of the last days. We shall remind that first of these events happened on Friday - the publication of the US labor market survey for January. We shall notice that the main intrigue of this release was that the basic figure of the survey – number of new jobs - was considerably below the forecasts.

 

However it took investors some minutes to understand that considering the revised data for the last months as a result the market received the expected 300.000 jobs.

Besides the remuneration of labor rose considerably, and the rate of unemployment went down to a bottom for the last five years. As a result all this strengthened investors’ confidence of FRS rates increase on March, 28th.

Let's remind once again that the market is still focused on a difference in interest rates, which certainly supports the dollar.

 

Another event, which influences greatly on the markets, is escalation of intensity around the Iranian nuclear program. So, the oil prices were up on Monday after the statement of Iran that it would begin again enrichment of uranium.

Let's remind that Iran’s government took this decision after IAEA decided to transfer "the Iranian file" to Security Council of the United Nations.

Now the oil market is afraid of supply breaks from Iran or its stoppage.

 

Let's also remind that Friday March futures for oil WTI rose in price on69 cents and made $65.37 for barrel.

"The statements of Venezuela President Ugo Chaves, who promised to imprison diplomats of the USA who were caught in a espionage, added fuel to the fire. Moreover Chaves threatened to close all Venezuelan petroleum refineries in territory of the USA.

 

Concerning a difficult situation in the market of energy carriers, International Energy Agency Head Claude Mandil declared yesterday that oil rally would go on if OPEC does not invest into oil production. He named a figure as well – about 500 billion dollars, having emphasized that these investments are necessary to meet demands.

Mandil also noticed that the US president call to lower dependence of the USA on oil import from the Near East could hardly sustain investments rise in this region.

 

However, as a whole, despite a difficult situation in the oil market yesterday the dollar exchange rate reached maximum levels for the last month against euro, the British pound and the Swiss franc.

The main driver of growth of a “greenback” rate is the factor of strengthening of expectation of the further the US interest rate growth after the publication of Friday US labor market survey for January.

These expectations are also supported by the words of Dallas Federal Reserve bank President Fisher, who has declared today that the US FRS will control the inflation rate in future. The market now is sure that FOMC will again lift the rate on March, 28th.

 

As a result we recommend continuing to keep purchases of a dollar/franc rate. The purposes of growth at 1.3100 also hold good.

The situation around a dollar/canadian rate while remains difficult to forecast - the total strengthening of the dollar is graded here by risk of oil quotations increase. Therefore while it is necessary to keep a waiting position concerning this pair.

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