Sunday, January 30, 2011

Weekly FX Market Analysis - February 2011 Week 1

Hi all,

This will be the Pre - FX Market Analysis for this week.

As we all know, this week will be a very challenging week. It's the first week of the month which is a favourite week for Fundamental Traders. It's THE NFP WEEK!!

On the weekend, there are so many post about how this month NFP Data will gradually change the trend of the Major Pairs. But contrary on the first day of trading, the speculations tumble as USD lost against all the Major Currencies especially the GBP. The currency is now a creating a Risk Aversion sentiment (the kind of risk to be avoid due to the uncertainties). What is wrong? and what is the reason behind all the sentiment toward the bearish movement of USD?

This is what I quoted from my favourite market commenter. Kathy Lien (Director of Currency Research GFT)

1) The price action in the financial markets today suggests that investors are in a better mood but this improved sentiment masks the escalating tensions in Egypt. The market may be relieved to find the Suez Canal open for operation and Egyptian President Murabak still in power but the protests have continued for a seventh Day and demonstrators are still calling for Murabak to step down. A "March of Millions" is scheduled for Tuesday and continued violence could lead to another round of risk aversion like the one that we saw on Friday.

...and here the extra boost for the sentiment for this week.

2) "This week is about job growth and it is only thing that could change the sentiment of the central bank. Strong job growth would ease concerns about the pace of the U.S. recovery while sluggish job growth could exacerbate them."

Remember the ADP Non Farm Employment Change? It's a hint toward the NFP Data Number but for two month in a row it has been out of the theory. Still we will be looking for a hint for NFP and as for now it's the only one.

Too many uncertainties on the volatility of USD? Well, there is a way... Great Britain Pound vs Japanese Yen. The Full House Pair. It can triple all you have or wipe out everything in a day. BUT this pair have showed us a less average market movement for the last 2 weeks. This is due to mix correlation between GBP / USD / JPY movement. So this pair now seems to be mix up with all the sentiment and make a simple trading speculation for all of us. Furthermore, this pair react more toward GBP Economic Data Announcement. This 2 days, we will be focus more on Technical Setup as the market only react on false sentiment especially on pound. By the way, there are 2 news coming out of Great Britain on the evening. So we will be extra careful on this data announcement.

Below is what I quoted from my favourite commenter. John Kicklighter (Currency Strategist at 

"The other reason for my hesitance to take on a high-risk position was the existing exposure to GBPJPY. Largely a technical setup, I have been with this pair for nearly a week longer than I had expected. Looking for a reversal after its channel test, this was largely a technical setup; but the resolution was primarily fundamental."

You can check out my Weekly FX Market Analysis which as usual will be sent to you by email.

And still for this week FX Market Analysis, I will post a trade decision on GBP/USD (Fundamental & Technical).

I'll also post any update on above mentions Currency Pair.

For more information or to subscribe The Weekly FX Market Analysis please send an email to

Thank you.

Kind Regards,

Disclaimer: Forex Trading involves high risks, with the potential for substantial losses and is not suitable for all persons. Past performance is not necessarily indicative of future results.

1 comment:

  1. Hi all,

    Our target correction area for GBP/USD is at 1.6300. 25pips up or down around that area will be our sell point.

    Ahmad Shahmi


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