Range traders likely to take advantage of todays expected tight ranges, as markets eye tonight’s activity.
ANZ has issued a sell USD/JPY trade recommendation. An unwinding of the ‘reflation’ trade makes USD/JPY vulnerable to further weakness. ANZ “recommend selling USD/JPY at 110.55, targeting 106.50. We will reassess above 112.60.”
The Aussie dollar has come under pressure this week, and has tested the 0.7542 support level. Should further weakness play out, likely to be caused by US moves, the 0.7490 – 0.7500 level should be well supported.
Selling hit the EUR/USD after the European open yesterday, as the ECB’s Mario Draghi stated inflation is still a concern and stimulus is still required. This dovish tone saw a modest 50pip sell off in the Euro. The general downtrend towards support at 1.0631 looks to be in place.
Gold touched the 1,251 level, with a break of 1,260 expected in the event of Trump trade concerns. Some range trading opportunities may present in the next 24 hours given the news hitting the market.
Trump meets with Chinese President Xi Jinping to talk trade – likely to occur Friday night US time. Non-Farm Payrolls at 10:30pm – expected at 174K – likely to outperform given Wednesdays strong ADP employment beat. Traders will be looking at the Average Hourly Earnings, a leading indicator of consumer inflation, to bounce back after two consecutive weak numbers.
A 70 point range this week in the ASX200, and 370 points in the DOW as markets are eyeing further direction. Over the last two trading days US equity indices have given back session gains, chopping around in a relatively small range. The market is weighing up the FOMCs unwinding of its balance sheet against the Trump trade and an expected strong Non-Farm Payrolls report tonight.
Economic calendar
Asia session
Today we see China foreign reserves being released (time unknown).
Europe/US session
6:30pm British Manufacturing production
10:30pm Canadian Employment
10:30pm US Non-Farm payrolls employment
