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Euro Dollar – Fundamental News 4th February 2009

There are four important pieces of data out today for the euro to dollar pair, the first is in Europe this morning and the second in the US this afternoon. The data just released is called the Final Services PMI, and is interesting in that it is released 2 minutes before the public release, to Thomson Reuters, so that any reaction to the numbers is as a result of trades made by clients to the service. The numbers are then made public at 10.00 am, and have come in at 42.2, against a forecast of 42.5 and a previous of the same figure. There are in fact two versions of this report which are released a week apart, one is called the flash, and the other, which is today’s, the final. As with many other of these index figures, a number greater than 50 indicates an economy in expansion, and below 50 one in contraction, with the numbers for this morning having little immediate impact on the eur dollar pair. Generally if the forecast is exceeded then this is good news for the home currency, in this case the euro. The survey is conducted amongst purchasing managers who provide a view of the economic and business climate, and hence the broader economy.

In the US this afternoon we have three fundamental news announcements starting with the ADP Non Farm Employment change at 2.15 UK time, then the ISM Non Manufacturing PMI data, and finally the Crude Oil Inventories, which always have a major impact on daily oil prices. The ADP estimates the change in the number of people employed during the previous month, but excluding farming and the government, with the forecast of -528,000 against a previous of -693,000. This is a relatively new set of figures, released monthly, which have only be produced since 2006, but have since provided a remarkably accurate guide to the major release two days later of the Non Farm Payroll figures from the Government – so an early indication of Friday’s figures and eagerly awaited by traders as it provides a leading indication of job creation. If the actual beats forecast. then this is generally good for the home currency in this case the US dollar. Next we have the ISM figures due at 4.00 pm ( UK time)  and again this is a leading indicator as it polls a survey of around 400 purchasing managers who rate business conditions, including orders, costs, materials etc, and so provides a view of the current business climate. The forecast is 39.1 against a previous of 40.1.

Finally we have the Crude Oil Inventories,which measures the change in the number of barrels of crude oil held in stock by by commercial firms during the past week. Whilst these figures are released in the US, the main effect is on the Canadian Dollar ( usd to cad ) Naturally there is always an effect on the US dollar, due to it’s correlation with crude oil prices. The forecast is 2.8 million from a previous of 6.2 million barrels. It is always hard to predict the effect that the number will have on either the US or Canadian dollar, as the conclusions the market draws may have already been factored in to the current price, as the numbers are generally well forecast in advance by the oil trading community.