What Happened on Thursday > Top 3?
- USD dragged lower again after ISM Manufacturing data miss
- Bank Of England holds rates & talks down the Pound
- Weakness in USD very evident across the board
Outlook
- Aussie RBA Statement & Retails Sales to fuel profit taking or 0.8000.
- Canadian Jobs data will be key for the USDCAD
- Non-Farm Payroll numbers will sink or save the dollar
Data & Event Risk Today?
- (AUD) RBA Statement & Retail Sales – 11.30am Sydney
- (CAD) Trade Balance & Jobs Data – 10.30pm Sydney
- (USD++) US Headline Jobs data– 10.30pm Sydney
USDX: 92.60
A miss on the US ISM Manufacturing data last night put pressure on US yields, dragging USD lower.
The market is very short USD currently but caution is warranted leading into a possible improvement in the US unemployment number or new jobs added data release tonight.
USDJPY: 109.90
USDJPY traded lower across all trading sessions to end the day under 110.
This may be the best market signal for further downside assuming tonight’s NFP data is a miss for the US. I favour the USDJPY to move towards 108.00 or even lower as the markets consider pricing out the possibility of a December rate hike.
EURUSD: 1.1880
Euro strength is obvious currently, as the divergence between yet another US data miss (ISM Manufacturing) and the recovering Eurozone (Better CPI data this week) kicks into gear.
The EURUSD will spike to 1.1980 tonight if the US jobs data is not a stellar report card for the USD.
GBPUSD: 1.3140
Sterling totally fell out of bed yesterday as the BOE held interest rates but they also decided to talk down the GBP in Governor Carney’s speech.
The key points were that they referred to the lower GBP rate helping inflation, which is not what the GBP bulls wanted to hear. They (including me) wanted to heard that inflation is putting pressure on BOE to move rates.
Furthermore, BOE highlighted concern regarding Brexit and that was enough negative slant to drag GBPUSD from levels around 1.3265 to lows of 1.3110 before a recovery to 1.3240.
The fact that GBPUSD didn’t bounce back significantly, when other pairs rallied against the USD is a bad sign that the market didn’t like the BOE sentiment and that 1.3150 will hold for the short term. I still hold LONG positions looking for longer term strength against the USD targeting 1.3500 at year-end, with patience.
AUDUSD: 0.7955
The Aussie dollar had an interesting day yesterday, initially moving lower to 7910 after the softer Trade Balance data release.
The Aussie popped back to 7950 purely driven by the moves lower in US 10-year treasuries pressuring the USD across the board.
The RBA statement in 30 minutes and will be key for a bounce towards 8000 but I expect a tight range before NFP data release.
NZDUSD: 0.7340
The NZD price action this week has been a mirror image of the AUDUSD chart on the H4.
Kiwi looks like it wants to jump back to 7500 but will need a soft US jobs report to fuel that bouncy move. This is very likely but I think gains will be limited to 7550 so watch for some great post-NFP trading opportunities.
USDCAD: 1.2565
USDCAD recovered again yesterday, grinding higher through last week’s high around 1.2625 showing just how much this market wants to buy the huge dips lately in USDCAD.
A great pair to BUY after NFPP if we see some light at the end of the USD tunnel.
VIX: 10.44
Stock markets were mixed last night as we have 80% of reporting season done and dusted.
I love the long VIX trade looking a stock market correction anytime soon, although I have been saying that for a few months. It is just a matter of time (and patience).
GOLD: $1,268.95
Gold recovered beautifully after yesterday’s wild spike lower on the Asian market open.
On Monday I called this exact style of price action, namely a profit taking smack lower from 1270 then the Buying to resume as the large volume traders fade the Fed and the USD outlook for NFP.
Look for upside to 1280.
Oil (WTI): $49.05
Oil poked it’s head above $50 again in the US session overnight before selling down sharply to rest at $49.
Such a good sign to sell back towards $44.
Macro Themes in Play
- BOE chose to derail the GBP uptick and has reversed the market sentiment for GBP fiercely.
- USD data misses again, dragging on the USD, with EURUSD benefitting most
- Markets want to race in and buy USD at these lows, but are waiting for the NFP tomorrow.
Russell Sandiford / Dealer |
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