Daily Trader Talk – Monday 10th July.
What Happened on Friday > Top 3?
> US Jobs Report pretty solid.
> G20 Meetings fairly non-eventful
>Canadian Data strong, pointing to Rate Hike.
Outlook
+ Janet Yellen testimony, midweek & US Inflation on Friday.
+ CAD Rate Hike looming, midweek.
+ Equities dragged higher, Oil lagging lower under $45
Data & Event Risk Today?:
- (AUD) China CPI & PPI Data – 11.30am Sydney.
USDX: 95.80
The Dollar Index did its usual whipsaw movement over the headline US Jobs data release but finished relatively unchanged.
The Headline jobs data was good, but unemployment ticked slightly higher from 4.3 up to 4.4%.
USDJPY: 113.95
Dollar-Yen spiked towards May highs around 114.20 on the headline US jobs data report.
It has drifted back under 114 again on Monday morning open of trade and with a light economic data docket, today should consolidate 15 pips either side of the 114 handle today.
EURUSD: 1.1400
The Euro took a solid run higher to 1.1438 before settling back around 1.1400 after markets digest what the US jobs report means for the Fed funds futures outlook.
The midweek Janet Yellen testimony may reaffirm the Fed positive outlook now that a mixed yet positive jobs release has hit, but Euro may still rally against the USD as I have been calling since the 1.1300 price level.
Until we see a break of 1.1450 a run towards 1.1500 will struggle for momentum, but this week Friday we see US CPI which will certainly be the catalyst for breakouts.
GBPUSD: 1.2890
The Sterling really got hit on Friday’s jobs report showing the vulnerability of GBP.
The GBPUSD bottomed out around 1.2870 before rebounding, but only slightly to remain under 1.2900.
MPC Member Haldane speaks again tomorrow during the start of the London trading session, so that may spur another brief rally in GBP against all of the other currencies.
AUDUSD: 0.7605
AUD has continued to be very resilient holding firmly at the 7600 level.
The spike higher to 7630 was short lived for the Aussie against the greenback, but another consolidation day is like on the back of China data this morning to kick-start this week.
I am still cautious of a Trump-led risk off move on the back of North Korean retaliation comments this week when the US President returns from what was a quiet G20 meeting for him at the weekend.
NZDUSD: 0.7275
NZDUSD popped higher back up to 7300 on Friday but again was short-lived, seeing a retreat to 7275.
The mixed result for US jobs, which saw Unemployment for the US tick slightly higher was overshadowed a little by the New Jobs added number being a solid beat of estimates, dragging Kiwi back to 7260 in whipsaw trade action.
There is a light data week ahead of Wednesdays Testimony by Janet Yellen but I can see NZDUSD heading back down to 7230/7250 this week in directionless trade for the Kiwi.
USDCAD: 1.2880
USDCAD was a great trade lower from the 1.3000 level as I called last week.
The jobs data was released for Canada and were a bumper number of new jobs added plus Canadian unemployment ticked slightly better signalling an open door for a rate hike of 25Bps this Wednesday.
The question is, has the USDCAD already priced in this rate hike completely?
USDCAD price action has struggled to break down through the 1.2850 level now and in the past, this has offered good resistance, but the August 2016 lows around 1.2780 may be seen midweek if the Q & A section of Janet Yellen’s testimony fails to inspire the USD Bulls.
VIX: 11.19
Volatility Index slid back under 12 as Equities rallied again on Friday.
The fear index is still seasonally low despite the potential for risk off moves from Geopolitics, surprisingly.
GOLD: $1,213.70
Gold reset lower as the markets took the US Jobs data as USD positive.
Buyers will step in soon on Gold and may have already, as it bottomed out at $1,207 and heading back towards 1215 fairly quickly, post-NFP data.
Oil (WTI): $44.60
Oil drove lower to 43.75 before a bounce back to 44.50.
The oil price is still very volatile but failing a move above $45 most likely spells more downside pressure in a quiet data week.
Macro Themes in Play
- USD Positive Bid on US Jobs data, markets expecting CAD Rate Hike.
• Janet Yellen’s Testimony midweek & US CPI will the key for USD.
