New York Forex Report: All Eyes On NFP Release

New York Forex Report: All Eyes On NFP Release

New York Forex Report: The US labour market report for May will be today’s key focus for markets. The April labour market data showed a sharp rebound in payrolls following March’s disappointing out turn, while the unemployment rate fell further to a new cyclical low of 4.4%. Nevertheless, despite these indications that the labour market remains ‘hot’, wage growth continues to be only modest. With the Fed already effectively signalling that that they are likely to raise rates again in June, it seems only a shocking payrolls report would change their mind. Markets do not expect it to be an issue as with ‘the street’ forecasting another solid payrolls rise of 185k, although following yesterday’s strong ADP report, the risk of an above 200k rise has somewhat increased.

USD Macro fundamentals returned to the fore for the first time after a long while. Stronger ADP job addition and ISM manufacturing index further reinforced the case for a June rate hike. ADP added 253k jobs in May, more than expected, while ISM manufacturing ticked higher to 54.9 in May as new orders and employment increased. Fed Powell signalled the Fed is on track to raise rates, citing a “healthy” US economy although he does not expect the Fed to trim its balance sheet by more than US$2 trillion over the next five years, signalling very modest policy actions.

EUR Downbeat inflation figures from France and Eurozone had limited impact on the EUR, as markets had already priced-in weaker data, especially after the German CPI and retail sales disappointment. Looming Greece default concerns also starting to weigh on bullish spirits

GBP UK manufacturing gauge dropped to 56.7 in May (April: 57.3). Even with a softer reading, it remains well above 50, the threshold separating expansion from contraction

JPY weakened a little against the USD Thursday on news that Japanese companies increased their capital spending in this year’s first quarter. Official figures showed a 4.5% annualised rise. The figure beats both the 4% gain expected and the previous quarter’s 3.8% increase. A rise in capital spending suggests that Japanese companies see buoyant times ahead, but the YEN’s slip on the CAPEX data suggests that the strong data reflects Japan’s strong export rather than its domestic economy

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

Technical: 1-3 Day View – Breach of 1.12 refocuses bulls on equidistant swing objective of 1.1291 en-route to a test of broader symmetry swing objective at 114.30. Only below 1.11 concerns near term bullish bias opening a move back to test 1.1020.

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.14 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Symmetry swing objectives at 1.3060 & 1.3118 are targeted a close below 1.2750 concerns near term bullish bias and opens a move back to test the 1.26 pivot, the near term upside hurdle is sited at 1.2920

1-3 Week View – The weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of the broader symmetry swing objective sited at 1.3238.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – 115 becomes the next upside objective only back below 110.20 would concern the near term bullish bias opening a retest of 1.0940, near term 112.30 is the next upside hurdle.

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Close over 124.40 opens 129.44, near term support is sited at 123.10, near term upside objective of 126.84 equidistant swing objective, only below 122 concerns near term bullish bias.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 a weekly breach of this level opens 129.44 as the broader upside objective
Retail Sentiment: Bearish
Trading Take-away: Long

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