Please note, that this article comes from my archive. Check the actual date in the header.
07:00 GMT
EURUSD 1.1883
EURGBP 0.9202
GOLD 1318.55
USDJPY 110.15
USDCAD 1.2469
Strong data from US this week had a very limited support for greenback. US GDP growth 3.0% beating expectations and ADP employment change +237K gave a lift for US equities, but not dollar, which continued to slide yesterday on Core PCE Price index (1.4% YoY) below Fed target (1.5 - 1.6%) and Personal spending lower-than-expected (0.3% MoM). This was an other additional brick to the wall dividing Fed rate hike and reality. How would they justify rate hike with no inflation on the table?
This situation explains weakness of the greenback across the board. This is why gold prices soared yesterday without any missile support, bouncing from 1300 in early Asian session. Stable and sustainable growth with low inflation, lower market expectations of a rate hike from Fed and talks about upcoming tax reform in USA - these are factors supporting equities. NASDAQ closed at record highs yesterday.
We suggest a continuation of such tone after today’s NFP report. Average expectations are settled around 180K jobs added in August. Let’s imagine we’ll have a strong reading above 200K. So what? Will it give something heavy in FOMC hands? Buying flow of USD will be very limited in time without average hourly earnings beating expectations. While weaker report will cause selling the greenback without any volatility. Equities will react on positive report, continuing to move up, but not the USD.
Euro bounced from peak level this week more than 200 pips. That’s a deep enough retracement. But Euro bulls need a catalysator to continue their run towards 1.20 / 1.25 range. The market participants keep in mind ECB meeting next week and we noticed some rumors about possible verbal intervention from Draghi.
Technically, EURUSD settled around average levels intraday. You can see below a blue dotted median line on the H4 chart below. The prices will consolidate around this line before ECB meeting next Thursday most probably. There is a SMA89 red line below, which looks as buying opportunity to us. Buy dips strategy remains in play for the market, and we got nothing to do except following the market sentiment.
By the way, last time we talked about oscillators to reload. Now RSI14 is very far from overbought levels.
Assuming all said, we expect such a scenario. NFP report to come out strong in the range of 190K - 230K (above consensus) while average hourly earnings in line or slightly lower-than-expected (0.2%). We suggest an initial reaction for EURUSD to go down. And we’ll be looking for the levels to go long hoping for reversal and strong close at the end of the day. NFP traditionally has huge volatility, so it’s not easy to predict and count exact levels. We’ll be looking at momentum before pulling the trigger.
USDCAD shorts from yesterday hit our Take Profit order on strong CAD GDP figures, exactly as we expected. We observe here some technical support. Plus Harvey is still strong. So we have a wait-and-see position. Same story with GOLD. We’ll have a deep outlook for a lot of assets this weekend before the start of new season.
Let the profit be with us!
Please note, that this article comes from my archive. Check the actual date in the header.
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