London Forex Report: Wage Growth & Revisions Underpin USD

London Forex Report: Wage Growth & Revisions Underpin USD

London Forex Report: An acceleration in wage growth at its fastest pace since the global financial crisis overshadowed fewer than expected job creations and declines in durable goods orders, and continued to bolster expectations for a more aggressive rate normalisation path this year, in line with Fed Lacker’s speech that the Fed may need to raise rates faster than what market is currently anticipating. Nonfarm payrolls added fewer than expected job gains of 156k in December although net two months revision for October and November stood at +19k, somewhat softening the blow from the soft December print. Unemployment rate ticked 0.1ppt higher to 4.7% as expected while participation rate was unchanged at 62.7%. Wage growth that grew 2.9% YOY, its quickest since Jun-09 offered the biggest lift to Friday’s job report. USD rebounded against all G10FX peers as US data suggested continued improvement in wages. The Dollar Index climbed in US session post-data and extended its upward traction to close 0.69% higher at 102.22

FX Majors: EUR Economic and business sentiments were upbeat in the Eurozone as economic outlook improved; posting signs that household spending will pick up this quarter. A gauge of economic confidence rose from 106.6 in November to 107.8 in December while business climate indicator increased from 0.41 in November to 0.79 in December. Consumer confidence index, on the other hand, was unchanged at -5.1. GBP In an interview with Sky News on Sunday (8 Jan), UK Prime Minister Theresa May denied the government’s plan to exit the European Union is “muddled” and promised that she will unveil details of her strategy in the coming weeks. May explained that there was no plan for Brexit drawn up by her predecessor David Cameron and she needed to assess the situation and work out the correct way to act once Article 50 of the Lisbon Treaty is invoked by the end of March [2017], starting two years of divorce talks. JPY Note that Japan markets will be closed on Monday (09 Jan), for the coming-of-age Day holiday.

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

Technical: Close over 1.0550 opens symmetry swing resistance sited at 1.0640 before pivotal 1.0720. Anticipate sellers to emerge at these levels, as this band of resistance caps upside bears target retest of 1.0338 lows. Near term support sited at 1.05 failure here suggests early reversal to trend.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As anticipated short squeeze subsides and 1.2198 eroded overnight, a close below here opens 1.21, near term resistance sited at 1.23. A close over 1.23 suggests false downside break an opens move back to test 1.2430
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Testing pivotal 114.70 trend support, resistance sited at 117 eroded, a second close over this level resets bulls attention on 120 upside objective. Key upside hurdle is 117.61 symmetry swing resistance.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Buyers on the front foot while 121.60 supports on a closing basis, 124.42 symmetry swing resistance remains the upside objective, anticipate sellers to emerge and price to stall on the initial test of this level for a retests of 123.80 from above.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD After two straight sessions of price increases, gold price eased on Friday following the US December jobs report which saw a strong rebound of the US dollar. This gold price decreased by US$7.90 to close at US$1,173.40. OIL prices extended their increases on Friday (6 Jan) helping oil prices close out a 4th straight week of price increase. The US Nymex WTI finished the session higher by US$0.23 to close at US$53.99. AUD Australia trade balance registered a surplus for the first time since March 2014 in November amid the 8.40% surge in exports. Trade surplus position was AUD Australian building approvals +7.0% in November from revised -11.8% previous, Private house approvals -0.2% from -3.4% previous. The key to AUD maintaining strength is investor risk appetite and EM sentiment remaining underpinned. CAD Canada trade data producing an impressive surplus and with Canada employment coming in much better than forecast, some of the positive USD flow has been offset.

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

Technical: While .7330 contains upside reactions .7092 AB=CD is the next downside objective. Over .7330 opens symmetry swing trend resistance sited at .7370. Near term support is sited at .7270, a failure here suggests early trend resumption.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.3620 becomes the next upside objective. The close below 1.3250 concerns the bullish bias, a second failure here opens symmetry swing support sited at 1.3090. Near term resistance is sited at 1.3290.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: 1190 pivotal for the near term bearish thesis to remain in tact, a close above 1190 opens 1220 symmetry swing trend resistance. Near tern support is sited at 1150, failure here suggests trend resumption and opens 1113 symmetry swing objective.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Sharp rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Current consolidation pattern is constructive suggesting a retest of recent cycle highs.
Retail Sentiment: Bearish
Trading Take-away: Long

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