- Forex Commentary -

September 3, 2010 (FinancialWire) (Investrend Information Syndicate) (Via Brewer Investment Group) (Overnight, September 2, 2010, Report) — The U.S. dollar traded flat to lower as most traders remained cautious ahead of Friday’s U.S. non-farm payrolls report. Earlier this morning the dollar showed little reaction to the European Central Bank’s decision to hold interest rates steady and the slight drop in U.S. weekly initial claims.

Jobless claims remained a concern among investors because they remain at a high level. This is an indication that the U.S. economy is cooling while fueling worries that the recovery may not be sustained if private firms continue to refrain from hiring new workers.

The Euro held steady following the ECB’s decision to hold interest rates at 1%. The market did have a positive reaction to the comment from ECB president Trichet who said the recovery “should proceed at a moderate pace.”

Concerns over a slowdown in U.K. manufacturing growth and mortgage market worries helped pressure the British pound. Sterling investors seem to be pre-occupied lately over the new austerity measures and tax hikes. Many still feel the economy will slump because of these two programs.

The GBP USD chart indicates room to the downside with 1.5113 a potential downside target. Short-covering could trigger a quick pop to 1.5600, but this likely will be another selling opportunity.

A choppy stock market led to mixed results in the commodity-linked currencies. The New Zealand dollar traded better, but the Australian and Canadian dollars were flat which may be a sign that Wednesday’s strong rallies may have been overdone.

The rally in the U.S. equity markets has temporarily stopped the decline in the USD JPY. Earlier in the week the Japanese yen rose sharply after the government and the Bank of Japan failed to take intervention action and opted to increase its quantitative easing program. Stronger equity markets could revive appetite for risk and the carry trade, leading to a stronger dollar/yen.

Although the dollar is down this week, many large traders and institutions have been on the sidelines due to today’s employment report and Monday’s U.S. Labor Day holiday, leading to speculation that this week’s action was due to thin trading conditions.

Source: Courtesy of Brewer Investment Group, LLC; For more information, content and/or a preferred introduction to Brewer Investment Group, LLC and/or Brewer Futures Group, LLC, contact Investrend Syndications (via http://www.investrend.com/synd0001).

Brewer Investment Group, LLC, advises that Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from Brewer FX, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as "spread" or "straddle" trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. For more information, content and/or a preferred introduction to Brewer Investment Group, LLC and/or Brewer Futures Group, LLC, contact Investrend Syndications (via http://www.investrend.com/synd0001).

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