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Video for March 7th, 2008 (3min 54 sec): Weak Payroll Data Showing 2nd Month of Declines, Balanced by Fed Action No Surprises in Bank of Japan Meeting Overnight, Japan's central bank members voted unanimously to hold rates at .50%. The policy makers felt it unnecessary to be too concerned with downside risk to growth albeit signs of easing corporate activities. However, these risks are mostly in the short and medium term. This decision was widely anticipated and did little to move the market. GER Industrial Production Resilient German industrial production increased 1.8% on the month, and 6.9% on the year. These figures beat expectations, and activity has rebounded since slumping in October and November of 2007. The employment component has been rising, giving economists at least a subdued optimism that German manufacturing will be resilient to the downside risks surrounding the Euro-zone economies. CAN Employment Stronger Than Expected Employment in Canada increased by 43,300 during February and the unemployment rate stayed steady at its 33-year low of 5.8%. It's the second straight month that the jobs data was better than forecast, after a weak December in which jobs declined. US Jobs Shows 2nd Month of Declines The US labor market showed a second straight month of job losses, undershooting expectations, and furthering the theme that the US is teetering on the brink of a recession. The report solidifies in investors' minds that the Fed is most likely to act with another aggressive rate cut to shore up economic growth when they meet this month. EUR/USD - Sets High, Then Retreats
The Euro touched a new record high following the weaker US jobs data. However, an announcement that the Fed was going to increase the amount it would loan to banks over the next month, to the tune of $200 billion, helped stabilize the Dollar, and caused it to increase. The Fed is acting to help ease credit conditions that have curtailed lending among banks and institutions. USD/JPY - Back and Forth Session a Result of Equities
The US jobs data caused the Dollar-Yen to fall to a new 8-year low near 101.40. US stock markets opened lower, causing the pair to drop, though a rally in stocks following the Fed news gave the Dollar a boost. It was able to pare some of its earlier losses, but then equity markets, and the pair, turned back down. GBP/JPY - 300 Pip Movement After US Jobs Data
It was a similar story for the Pound-Yen. From its low following the payroll data, the pair climbed almost 300 pips in the next 3 hours, before reversing near resistance at 207.60. The Yen has been performing strongly this week as the recent financial turmoil engulfs US equities and increases risk aversion. Carry trade pairs, like the Aussie-Yen and Kiwi-Yen fell more than 1.8% for the week. USD/CAD - Loonie Falls On BoC Speculation
The US Dollar-Canadian Dollar pair rose to a one week high following the US jobs data. However, the slowdown in the US can hurt Canada as the US is its largest trading partner. Investors are anticipating that the Bank of Canada will pursue further interest rate cuts, after lowering their benchmark rate by 50 basis points this week. Upcoming Releases Next Week Next week kicks off with Producer Prices data from the UK, along with its manufacturing and industrial production. Last month, the PPI data was instrumental for setting a tone of higher inflation in the UK economy. Tuesday we get business sentiment data from Germany and the Euro-zone, while the US and Canada will unveil trade balance figures. |
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