London Forex Report: NFP Beat Keeps Fed On Track

London Forex Report

With the Dow Jones up over two percent Friday, market risk sentiment was supported after the release of better than expected US nonfarm payroll gains. The 211k job creation in November and the positive two-month net revision of 35k suggest the Fed has crossed another hurdle and is inching closer to a December rate liftoff. Other related job indicators also pointed to a continuous recovery in the US job market. USD Index managed to recoup losses to close 0.75% higher at 98.35 on firmer US employment figures.

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

Fundamental: EUR pulled back against the USD From its high last week of 1.0980 to a 1.0868 post NFP low. US non-farm payroll data was released as 211k, surprised the markets by 11k. The NF beat keeps Fed on track for a rate hike on December. The Euro posted its biggest weekly percentage gain against dollar in seven months last week.

Technical: While 1.0790 caps intraday downside corrections expect a grind higher to retest last weeks high. A failure at 1.0790 opens a retest of 1.0725 next

Interbank Flows: Bids 1.08 stops below. Offers 1.09 Stops above.
Retail Sentiment: Neutral
Trading Take-away: Sidelines

eu2015-12-07 07_43_09-NetDania - NetStation

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

Fundamental: Although US non-farm payroll was upbeat on Friday, GBP only slipped a little bit from 1.5132 to 1.5101. This may show that the news of December Fed rate hike was already priced in. The US November Unemployment rate stayed in 5%. On the other hand, US November Labor Force Participation rate was released as 62.5%, slightly better than the market expectations 62.4%. Markets await the BoE rate decision meeting which will be held on 10 Dec.

Technical:  While 1.5050 supports intraday downside corrections expect a move to test symmetry resistance at 1.5200/10. A failure at 1.5050 opens a retest of last weeks 1.4890’s lows

Interbank Flows: Bids 1.5050 stops below. Offers 1.52 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

gu2015-12-07 07_43_40-NetDania - NetStation

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

Fundamental: The US job data helped the USD gain against the JPY due to the fact that rate hikes are expected to boost the USD by driving investment flows into US. USDJPY hiked 0.49 percent to 123.2 last Friday. With speculation rife that BoJ will keep its policy unchanged, USDJPY will likely continue its range  trade between 122.50 to 123.50.

Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next. A failure at 122 opens a test of 121.40 support next ahead of pivotal 120.

Interbank Flows: Bids 122 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

uj2015-12-07 07_44_06-NetDania - NetStation

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

Fundamental: The cross remains supported as equities moved steadily higher and positive EUR flows maintain the bid tone. This week in Japan, market will likely receive an upward revision to Q3 GDP on Tuesday. On Wednesday, October machinery orders data will be released whilst on Thursday the Q4 MoF/BSI survey will be published, which will shed some light on the economy ahead of next week’s BoJ Tankan.

Technical:  While 134.80  caps upside reactions expect a retest of 132.50 from above to set the platform for another corrective leg higher.

Interbank Flows: Bids 130.50 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

ey2015-12-07 07_44_40-NetDania - NetStation

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

Fundamental: After the US non-farm data has come, AUDUSD reached the intra-day high 0.7385 and it receded its previous gain later to trade back to 0.7333. Australia October Retail Sales was 0.5%, better than the market forecast 0.4%. The AiG Construction Index was 50.7, worse than the previous 52.1 while the November ANZ Job was 1.3%, beat the previous 0.3%.

Technical: While .7270 remains the bid zone expect grind higher to test .7450 area next, only a close below .7150 concerns near term bullish bias.

Interbank Flows: Bids .7250 stops below. Offers .7400 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

au2015-12-07 08_01_17-NetDania - NetStation

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

Fundamental: USDCAD reacted to the OPEC’s oil production ceiling hike by pushing up to 1.3416, before quickly regressing back to 1.3365. Canada’s Unemployment rate was 7.1%, worse than the market forecast 7%. The third quarter Labor Productivity was 0.1%, also worse than the market forecasts 0.3%. OPEC is planning to maintain its production near record highs despite the fact that oil prices are depressed.

Technical: Bulls have the ball while 1.3280/60 supports intraday downside expect a grind higher to test stops above 2015 highs. A close below 1.3220 would ease the near term bullish bias and suggest a broader correction is underway.

Interbank Flows: Bids 1.3250 stops below. Offers 1.34 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

uc2015-12-07 08_01_39-NetDania - NetStation

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