Non-farm payrolls on Friday was solid at 215k jobs added however the USD reversed its gains shortly after the release. The number did not seem to convince markets that it is enough to secure a rate hike in September. Remember, last week dovish Fed member Lockhart said that it would take a significant deterioration in the data to convince him not to vote to hike in September. Please note that he is speaking again today so a strong USD could emerge again as a result of his hawkish stance.
BOE also somewhat disappointed with the rhetoric being dovish and more defensive as to raising rates which had its toll on the Sterling. BOE voted 8-1to leave the rates unchanged whereas the market anticipated at least 2 members voting for a rate hike.
In a nutshell, the FED is looking only at 2 things until the September 17 US rate decision and these are the things that will influence currency fluctuations until then:
- Becoming “reasonably confident that inflation is heading close to 2% “over the medium term” (watch out for inflation and wages data)
- “some further improvement in the labor market” (watch out for jobless claims and September 4th NFP)
For today, other than Lockhart’s speech, there is no significant data releases.
Trading Quote of the Day: “Motion creates emotion”
Currency Updates:
EURUSD
Pivot: 1.0915
Likely scenario: Long positions above 1.0915 with targets @ 1.0995 & 1.102 in extension.
Alternative scenario: Below 1.0915 look for further downside with 1.088 & 1.0855 as targets.
Comment: The RSI is well directed.
USDJPY
Pivot: 124.5
Likely scenario: Short positions below 124.5 with targets @ 124.05 & 123.85 in extension.
Alternative scenario: Above 124.5 look for further upside with 124.85 & 125 as targets.
Comment: Even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
GBPUSD
Pivot: 1.5545
Likely scenario: Short positions below 1.5545 with targets @ 1.542 & 1.5365 in extension.
Alternative scenario: Above 1.5545 look for further upside with 1.559 & 1.5635 as targets.
Comment: The RSI lacks upward momentum.
AUDUSD
Pivot: 0.7355
Likely scenario: Long positions above 0.7355 with targets @ 0.743 & 0.745 in extension.
Alternative scenario: Below 0.7355 look for further downside with 0.7335 & 0.7315 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
GOLD
Pivot: 1082.5
Likely scenario: Long positions above 1082.5 with targets @ 1101 & 1103.5 in extension.
Alternative scenario: Below 1082.5 look for further downside with 1080 & 1077.5 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limite
USDCAD
Pivot: 1.31
Likely scenario: Long positions above 1.31 with targets @ 1.3185 & 1.321 in extension.
Alternative scenario: Below 1.31 look for further downside with 1.307 & 1.305 as targets.
Comment: The RSI is well directed.
USDCHF
Pivot: 0.9790
Likely scenario: Long @ 0.9833 with targets @ 0.9885 & 0.994 in extension.
Alternative scenario: Below 0.9790 look for further downside with 0.9755 & 0.9715 as targets.
Comment: The RSI lacks downward momentum. The pair is supported by the 50-period intraday MA.
OIL
Pivot: 45.15
Likely scenario: Short positions below 45.15 with targets @ 43.07 & 42.5 in extension.
Alternative scenario: Above 45.15 look for further upside with 46.55 & 47.4 as targets.
Comment: As long as 45.15 is resistance, likely decline to 43.07.
DAX
Pivot: 11470
Likely scenario: Long positions above 11470 with targets @ 11720 & 11780 in extension.
Alternative scenario: Below 11470 look for further downside with 11380 & 11250 as targets.
Comment: The RSI has just landed on a support around 30% and is reversing up.
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