New York Forex Report: All Eyes On NFP Release

New York Forex Report: All Eyes On NFP Release

New York Forex Report: The USD is moderately firmer in very narrow ranges. Pressure on the USD has stabilized ahead of the US NFP release (top chart). A drop in the yuan in both the onshore and offshore markets (CNH falling more than 1% at one point, even after the PBoC lifted the CNY fixing 0.92%, the largest move in more than 10 years) has contributed to the steadier tone in the markets. European stocks are ending the week on a soft note, dampening US futures. Developed market bonds are mixed while WTI crude prices are firmer but within recent ranges. Quiet trading suggests that the market’s reaction function to the US data releases today may be muted. A number of components to watch today in the US jobs report. First and foremost, an upside surprise in hiring might be attributed to the Trump bump to business sentiment, although it’s probably too soon for any real effect to be evident; the consensus is for a 175k gain in jobs. Secondly, the unemployment rate is expected to nudge higher to 4.7% after reaching 4.6% (lowest since 2007) in November; a low unemployment rate may persuade policy makers that labour shortages are intensifying. Thirdly, earnings dipped in November but are expected to rebound to 2.8% in December, equalling October’s 7-year high print; higher wages would support the idea that US labour markets are tightening.

FX Majors: EUR The Eurozone November PPI rose +0.3%m/m as expected (from +0.8% in Oct), but more importantly, compared to a year ago, PPI rose to +0.1%y/y in November (from – 0.4%y/y in Oct and above the forecast of -0.1%y/y) after 40 straight months of decline. This is the first return of Eurozone factory-gate inflation after more than three years, since mid-2013. GBP The UK December Markit/CIPS services PMI rose to a 17- month high of 56.2 (versus expectations of a lower 54.7), the third straight month of increase while the November PMI was revised marginally lower at 55.1. JPY Japan’s labour cash earnings grew by 0.2%y/y in November (from 0.1% in Oct) in line with expectations but Japan’s real earning unexpectedly contracted -0.2%y/y (from 0%y/y in Oct).

EURUSD
Outlook: Short Term (1-3 Days): Bullish – 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
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Only over 1.2440 suggest some selling relief. Short squeeze running out of steam, however, as 1.2310 supports potential for another push higher to challenge pivotal 1.2550
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Testing pivotal 114.70 trend support, near term resistance is sited at 117, a close over this level resets bulls attention on 120 upside objective.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD price continued to climb higher on Thursday for the second straight session on the back of the sliding US dollar. This gold price increased by US$16 to close at US$1,181.30. OIL extended their increases on Thursday after US crude inventory declined more than expected last week by a significant 7.1 million barrels versus analyst forecast for a 2.2 million decline. That said, the significant drawdown may partly be due to year-end tax considerations, as refiners use up crude that is on hand to avoid facing higher taxes for larger inventories. 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 1.243 billion thanks mostly to the increase in exports of non agricultural goods. CAD Event risk ramps up to end the week with the release of the employment and merchandise trade reports.

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
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1.3620 becomes the next upside objective. Only a close below 1.3250 concerns the bullish bias, a second failure here opens symmetry swing support sited at 1.3090
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
Retail Sentiment: Neutral
Trading Take-away: Neutral

USOIL
Outlook: Short Term (1-3 Days): Bullish – 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.
Retail Sentiment: Bearish
Trading Take-away: Long

Posted in Forex Analysis, New York Forex Report, tagged with on