London Forex Report: Softer USD On Tepid Jobs Data

London Forex Report: Softer USD On Tepid Jobs Data

London Forex Report: US non farm sector added a mere 151K jobs in August, sharply lower than July’s upwardly revised 275K and below consensus for a 180K increase. Underlying details were also a tad softer with average wage gains growing at a slower than expected pace of 0.1% MOM even though unemployment rate and participation rate steadied at 4.9% and 62.8% respectively. Net past two-month revision was -1K. The latest job prints overshadowed other positive data releases namely a much smaller trade deficit and final print of durable goods orders that confirmed a 4.4% MOM spike in orders in July, setting back the earlier “hyped-up” expectations for a September Fed rate hike. USD Index unexpectedly rebounded after tumbling on weaker than expected US data, advancing 0.2% to 95.84 at the close Friday.

FX Majors: EUR closed lower at 1.1153 against the USD as traders believe the prospect of an interest rate hike in December is still on the table despite the jobs data not supporting a September hike. Traders await the European Central Bank meeting due this week. It is widely believed that ECB would keep policy unchanged but will probably respond to pressure for further easing by announcing an extension to its asset purchase program at the year end, according to a Reuters poll. GBP mirroring the better manufacturing PMI reading last week, UK’s construction PMI showed diminishing headwinds in August from Brexit fallout. Albeit remaining in contraction territory, construction PMI came in at 49.2 last month (July: 45.9) as Brexit shock tapered off. Separately, deflation prevailed in the euro zone as producers prices extended its streak of contractions (July: -2.8% YOY vs June: -3.1% YOY). JPY Japan’s gauge of consumer confidence rose to the second highest level this year. The index climbed from a previous reading of 41.3 in July to 42.0 in August as households anticipate better job prospect in the near future. Sub-index for overall livelihood and income growth was also higher.

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

Technical: EUR tests and holds symmetry swing support sited at 1.1125. Over 1.1250 brings last weeks highs back into play at 1.1366. Failure below 1.1120 opens 1.1050 next.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 1.32 supports expect pivotal test of 1.3372 next. Failure below 1.3185 opens move back to 1.3065
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Anticipated test of offers over 104 reject the initial foray above the figure, as 102.80 supports 105.50 is the next upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 114.70 supports bulls target 117, failure below 114.50 opens a retest of pivotal support at 114.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD spiked to as high $1,330.20 after non-farm payrolls, and subsequently settled up 0.86% at $1,325.21 an ounce. Oil gained $1.28 (+2.97%) to $44.27 a barrel on Friday, supported by remarks by Russian President Vladimir Putin and Saudi Arabia’s Finance Minister Adel alJubeir of reaching a output freeze in the informal meeting on 26-28 Sept. However, oil still finished down 6.7% for the week due to earlier week losses. AUD a gauge of the Australian services sector indicated a cooling economy in 3Q. Services PMI dropped from 53.9 in July to 45.0 in August and pointed to broad based decline in growth, in conjunction with a contracting manufacturing sector. An earlier release showed that manufacturing shrank for the first time in fourteen months. CAD US jobs data was a major driver of CAD gains, but higher oil prices and stronger Canada data in the form of labour productivity and trade also contributed to the gains Friday.

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

Technical: Support at symmetry swing .7501 to caps downside correction and set a base to target offers over .7600. A close below .7500 would concern the near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Failure at 1.2960 support opens a move back to test bids at 1.2830, near term resistance is sited at 1.3040
Retail Sentiment: Bullish
Trading Take-away: Short

XAUUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish

Technical: 1301 AB=CD equidistant swing support has provided anticipated base. Near term resistance at 1333. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

USOIL
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: Near term resistance is now sited at 46.44 as this area rejects expect a grind lower to 41.00. Over 46.50 opens 47.50 as the next upside objective.
Retail Sentiment: Bullish
Trading Take-away: Short

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