ForexNewsNow Daily Market Outlook for March 3rd, 2011

NEW YORK (Forex News Now) – Daily Market Overview – USD news reported that the U.S. Dollar traded mostly lower on Wednesday, dropping sharply against the Euro and Sterling. Nevertheless, the Greenback only fell modestly versus the Canadian and Australian Dollars, while it rose against the New Zealand Dollar. The Japanese Yen ended Wednesday’s session mostly unchanged.

The price of gold made a new record high trading up to $1,440.30 on Wednesday as continued unrest in the Middle East continues to influence the commodity markets. In addition, the price of crude oil also rose over $100 per barrel with spot WTI closing at $102.23. The rebellion in Libya continues fighting the government forces supporting Colonel Muammar al-Gaddafi.

Furthermore, GBPUSD news reports of a better than expected improvement in the U.K. Construction PMI survey sent Sterling higher versus the Greenback.

The U.S. Dollar was also weaker after the release of mixed U.S. employment sector data on Wednesday, according to daily forex news reports. ADP Non-Farm Employment Change showed a better than expected number, but U.S. Challenger Job Cuts increased by a whopping +20 percent.

Also weighing on the Greenback’s performance on Wednesday were comments made by Fed Chair Ben Bernanke when testifying before Congress. The overall gist of the testimony was viewed as dovish by the forex market, with a general denial of attempts to depreciate the Greenback.

March 2^nd Important Economic Developments:

1. The Price of Gold Makes New All Time High – Continued unrest in Libya and now Iran has sent gold higher yet again. The precious metal rallied to another new all time high of $1,440.30 on Wednesday. In addition, crude oil prices held above the $100 per barrel level, with West Texas Intermediate closing at 102.23, up +$2.60.
2. U.K. Construction PMI Boosts Sterling – GBPUSD traded considerably higher on Tuesday after the U.K. housing industry continued its strengthening trend. Wednesday’s release showed a better than expected gain to 56.5 after the number was expected to come out at 53. Its previous print was 53.7 that went unrevised.
3. U.S. ADP Non-Farm Employment Change Exceeds Expectations – This key indicator for U.S. employment released by Automated Data Processing precedes the all important U.S. Non-Farm payroll numbers out on Friday. The market should have been more favorably impressed with its rise to 217K versus the expected 178K, and the fact that its former 189K result was revised slightly higher from 187K. Nevertheless, the U.S. Dollar fell against most of the other majors immediately after its release.
4. Fed’s Bernanke Testified Before Congressional Committee – Fed Chair Bernanke endured a second day of testimony before the House Financial Services Committee. In the question and answer session, he stated that, “I just don’t see at this point that there is a major shift away from the dollar.” The Greenback managed to recover some earlier losses after this comment.
5. Australian Building Approvals and Trade Balance Show Mixed Results – Australian Building Approvals fell by a very disappointing -15.9% last month, compared with the expected drop of only -3.1%. This decline was only slightly offset by the upward revision of last month’s rise of +8.7% to 10.0%. Furthermore, the Australian Trade Balance was expected to show a surplus of +1.53B, but printed higher at +1.88B. In addition, last month’s result was revised slightly higher to +2.02B from +1.98B.

March 3^rd Forex Events for Traders to Watch

1. Increasing Tensions in the Middle East – The rebellion in Libya persists as U.S. Marines were dispatched in response to the ruling regime’s violent crackdown on protestors. The forex market will be watching how the price of gold and oil responds to developments in Libya and Iran.
2. ECB Rate Decision – The European Central Bank is scheduled to release its Rate Decision and to hold an associated Press Conference today. In it, the central bank is expected to keep its benchmark Minimum Bid Rate steady at the 1.00% level.
3. U.S. Weekly Initial Jobless Claims – A key indicator for U.S. employment ahead of Friday’s key Employment Report, Weekly Initial Jobless Claims are expected at 394K, up slightly from last week’s 391K result. A lower than expected number tends to boost the Greenback.
4. Bernanke Speaks in New York – The Federal Reserve Chairman is scheduled to give a speech entitled “Challenges for State and Local Governments” in New York at the Citizens Budget Commission Annual Dinner. His statements can impact the U.S. Dollar significantly.
5. Swiss Retail Sales – Retail Sales in Switzerland are expected to rise by +1.7%, after last month’s slight drop of -0.8%. A lower than expected result for this important Swiss number could see USD/CHF rise as the Swiss Franc drops. A limited risk way to benefit from such a move could involve purchasing a USD call/CHF put forex binary option expiring after the number’s release.