Morning Forex Report: NFP Miss, USD Bid On Wages Uptick

Market Commentary  

Headline NFP release surprised to the downside with a 173K print vs 217K expected, although average weekly wages picked up pace to 0.3%m/m from previous 0.2%. Notwithstanding the drop in jobs added, the wage number ties in well with the recently released Beige Book which reported signs of tightening labour market in several districts, which added support to the potential for a September move by the FOMC. Over the weekend, G20 nations agreed that global growth is still below expectations and “pledged decisive actions” to keep economy recovery on track. They also promised to avoid competitive devaluations.

EUR was marginally firmer amidst the decline in equities despite ECB QE talk last Thursday. With the ECB ready to do more this could add to the impetus to sell EUR on rallies, but the conflicting risk-off sentiment moves in equity markets supports the EUR so for now the pair is trapped by an ECB QE offer and a risk aversion bid.

GBP weakened for a second consecutive week to a three month low of 1.5214 amidst slightly weaker than expected data – manufacturing, services and construction PMI. The PMIs were only slightly weaker than expected as they remain in expansionary territories. Focus for the week will be the BOE meeting. Previous meeting saw MPC members voted 8-1 in favor of keeping policy rate and asset purchase unchanged. BoE MPC statement and press conference were slightly less hawkish than expected. With inflation still soft and at risk of falling further due to oil prices, GBP strength is not desired as excessive GBP strength could see further downside risk to inflation and derail the policymakers effort to anchor inflationary expectation.

USDJPY remains on the back foot, trading below the 120-handle as the sell-off in the equities market continues on concerns about global growth. Pair is hovering currently below the 119- handle with a double-top resistance having formed at 124-125 levels, In the near term the pair will remain faithful to how equity markets perform.

Technical  Commentary 

EURUSD Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish

  • Pivotal 1.11 bids being tested a close below the figure should increase downside velocity enroute to 1.08 range support. Only a close above 1.1250 eases immediate downside pressure.
  • Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology bearish
  • Monitoring intraday price and Order Flow indicators on a test of 1.1050 or 1.1250

eu2015-09-07 07_37_10-

GBPUSD: Short Term (1-3 Days): Bearish  – Medium Term (1-3 Weeks) Bearish

  • Symmetry objective of 1.5210 achieved, Friday’s clsoe below 1.52 emboldens bears for a retest of psychological 1.50 level, only a close above 1.54 eases immediate downside pressure
  • Daily Order Flow bearish; OBV sideways, Linear Regression and Psychology bearish
  • Monitoring intraday price action and Order Flow indicators on a test of 1.52 or 1.54

gu2015-09-07 07_40_33-

USDJPY: Short Term (1-3 Days): Bearish  – Medium Term (1-3 Weeks) Bullish

  • As 121.50 caps upside bears now target a retest of last spike lows towards 116. Only a close back above 122.50 relieves immediate downside pressure
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bearish but stalling
  • Monitoring intraday price action and Order Flow indicators on a test of 119 or 122

uj2015-09-07 07_42_05-

EURJPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish

  • Breach of pivotal 133 range support opens a retest of 2015 lows towards 127 only a close back above 1.35 would reduce immediate bearish pressure, intraday look for 134.50 to cap upside reactions
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bearish but stalling
  • Monitoring intraday price action and Order Flow indicators at 134.50

ey2015-09-07 07_45_08-

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