EURUSD can be anywhere over this weekend it can be 1 and it can be 1.6.... no signals whatsoever
Let's see:
What caused the selloff on friday: 1. Hungary- default imminent.
2. French PM- Euro to parity
3. Rumours of Billions of Euro reserves being sold off by Iran.
4. US non-farm payroll data
Let's take it one at a time and we'll see the news have been jumped on without proper confirmation and analysis. Why? It's all wrong. Yes, the selloff occurred on news that were false or exaggerated or contrary to analysis.
1.
Talk of Hungary default "wildly exaggerated" - EUBUSAN
Sat Jun 5, 2010 5:14am EDTBUSAN South Korea, June 5 (Reuters) - The European Union's top economy official on Saturday dismissed talk that Hungary was about to tumble into default, saying its economy was on the way to recovery.
1.
Hungary Vows to Meet Budget Shortfall Of 3.8%
In order to keep the markets stable, Hungary's new government on Saturday announced a promise of keeping the country's official budget deficit goal for 2010. The new Government is also assuring that that the “country is not facing any sovereign credit default”.
According to the intended shortfall in this year’s budget by Hungary, the deficit will be at 3.8% of gross domestic product, in accordance with its standby credit line with the International Monetary Fund (IMF) and the European Union
(EU).
2.
PARIS (Dow Jones)--Comments by French Prime Minister Francois Fillon welcoming recent falls in the value of the euro created some confusion and sent the euro tumbling further after he used the French word 'parite,' which can mean exchange rate or parity in French.
A spokeswoman for Fillon said that when he used the word "parite" he was referring to exchange rates and not parity.
2.
MESEBERG, June 5 (Itar-Tass) -- Russian President Dmitry Medvedev urged the European Union to stabilise the situation on the financial markets because the economic soundness of the euro zone is vital for the whole world financial system.
“It is important now for our European partners to stabilise the situation,” Medvedev said at a joint press conference with German Chancellor Angela Merkel on Saturday.
“I hope that the stabilisation package that has been approved will work and the overall situation in the euro zone will be absolutely stable,” he said.
3.
Iran CB head denies report on euro sale
(AP) – 1 hour ago
TEHRAN, Iran — The head of Iran's central bank is denying the country plans to sell billions in euros as the currency weakens because of Europe's debt crisis.
Central Bank Governor Mahmoud Bahmani was quoted in Sunday's edition of the state-run Iran newspaper as saying a report early last week in a local newspaper that Iran plans to replace 45 billion euros of its foreign currency reserves for U.S. dollars was "not correct."
4.
"The dollar extended gains versus most major rivals other than the Japanese yen Friday after May U.S. nonfarm payrolls data showed a weaker-than-expected rise dominated by temporary government hiring. "
but the concensus was that the dollar would rise if the payroll data was stronger or near expected, it wasn't. Let's take a look at this:
The value of the dollar is the most obvious financial instrument that might be affected by an announcement regarding the performance of the US economy. If Non-farm Payrolls are rising and actual figures beat expectations, it is a good indication that the economy is growing and would give a boost to the dollar. Conversely, if actual Non-farm data is lower than economists' consensus estimates, traders may anticipate a weakening economy and sell US dollars. So, an instrument that might bear examining in light of Non-farm data is EUR/USD.
"Examining historical records for Non-farm Payrolls and EUR/USD reveals that the dollar does usually fall following worse than expected Non-farm results – but that the EUR/USD does not necessarily finish the day up.
For example, in both March and April this year, Non-farms were worse than consensus expectations. In March, the dollar immediately fell against the euro on the announcement, but later rebounded and ended the session stronger. In April, the dollar continually weakened and ended below its previous close. Clearly, Non-farm Payrolls have a significant impact on moving the dollar, but there is no simple formula in determining if dollar direction will be maintained throughout the day."
So, was the sell off justified?
I am staying out of trading monday.
