NFP increase by 224,000, most in 5 months.

  • USD: Nonfarm payroll in June increased by 224,000 jobs, the most in five months, well above market consensus of 160,000 jobs.
  • GBP: Johnson looking likely to succeed May, increasing the risks of a no-deal Brexit.
  • EUR: An ECB member says that stimulus package could come this month if needed. EU and UK are also in discussions with Iran to reverse its latest decision to abandon uranium enrichment restrictions.
  • JPY: Japanese data has been quite disappointing lately, adding to concerns about a global economic downturn.
  • AUD: Rose on Friday as upbeat employment data from the US boosted global trade sentiment.
  • CAD: BoC rates decision likely to remain unchanged, investors keeping a close watch on press conference with BoC Governor Stephen Poloz

FUNDAMENTAL ANALYSIS ON USD

USD strengthened on Friday, as a better-than-expected US monthly employment report diluted chances of aggressive rate cuts in the US, instead confirming policymakers’ moderated stance. Nonfarm payroll in June increased by 224,000 jobs, the most in five months, well above market consensus of 160,000 jobs. The economy created 11,000 fewer jobs in April and May than previously reported.  The solid NFP report sent US Treasury yields higher, with the yield on the benchmark 10-year note recovering above 2.0%, and stocks sharply down.

Job growth averaged 172,000 per month in the first half. Hiring has cooled from an average of 223,000 jobs per month in 2018. The pace, however, remains well above the roughly 100,000 needed to keep up with growth in the working age population.  The trend in wage growth has slowed from late last year when wages were rising at their fastest rate in a decade, pointing to moderate inflation. Average hourly earnings rose six cents or 0.2% after gaining 0.3% in May. That kept the annual increase in wages at 3.1% for a second straight month.  USD is likely to continue the upward trend ahead of Powell Fed Chair Jerome Powell’s testimony on Wednesday and Thursday.This week will also see the release of key data with CPI, unemployment rate and GDP data in focus where missing estimates could cause the currency to plummet further. ECB's interest rate decision will also be announced this week where interest rates are likely to remain unchanged.  

 

FUNDAMENTAL ANALYSIS ON GBP

UK PM frontrunner Boris Johnson looks set to succeed May and remains firm in his pledge to deliver Brexit by 31 Oct with or without a deal. According to Bloomberg, Yougov poll has Johnson getting 74% of the vote while Hunt with just 26%. The survey also suggests that the vast majority of the 160,000 grassroots party members who will receive their ballot papers this weekend don’t believe Hunt’s claim that he’s prepared to take Britain out of the European Union without a deal. Only 27% think Hunt would do so, compared with 90% for Johnson. With Johnson looking likely to succeed May, it increases the risks of a no-deal Brexit, putting GBP under further pressure.  


KEY TECHNICAL LEVELS ON GBPUSD

(charts from www.tradingview.com)

GBPUSD is testing our first resistance at 1.2525 which is a horizontal pullback resistance, 38.2% Fibonacci retracement and 61.8% Fibonacci extension. Our next resistance level is at 1.2556 where it is a horizontal pullback resistance and 23.6% Fibonacci retracement as well.

 

AxiTrader allows you to trade the Pound against the US Dollar (GBPUSD) as a CFD.

 

FUNDAMENTAL ANALYSIS ON EUR

EUR remains under pressure as an ECB member says that stimulus package could come this month if needed while Mario Draghi laid out the groundwork for Christine Lagarde as his successor. ECB looking to end its era of monetary easing at the end of 2018 is looking less likely with trade uncertainty and the sluggish economic growth and the ECB might resume its large bond purchases as one of the QE options. Elsewhere, EUR remains under pressure as EU and UK are in discussions with Iran to reverse its latest decision to abandon uranium enrichment restrictions. 

KEY TECHNICAL LEVELS ON EURUSD

 

 

(charts from www.tradingview.com)

EURUSD is seeing resistance at 1.1238 which is a retracement and extension level. RSI is also approaching our descending resistance line and Ichimoku cloud is showing signs of bearish pressure. 

AxiTrader allows you to trade the Euro against the US Dollar (EURUSD) as a CFD.

 

FUNDAMENTAL ANALYSIS ON JPY

On Friday, Japan released the preliminary estimate of May’s Leading Economic Index, which came in at 95.2, below the previous 95.9 and the expected 95.7. The Coincident Index, however, improved to 103.2 from 102.1, also surpassing the expected 95.5. Japanese data has been quite disappointing lately, adding to concerns about a global economic downturn, although negative numbers in the country usually play in favor of the safe-haven yen instead of sending it lower. At the beginning of the week, the country will release the May Current Account and Machinery Orders for the same month, alongside with the Eco Watchers Survey on the economic situation. Meanwhile, risk appetite stays mixed with strong data coming from the U.S. This could dampen the safe haven currency for a while, JPY could edge lower for the day’s trading.

KEY TECHNICAL LEVELS ON USDJPY

 

(charts from www.tradingview.com)

USDJPY is seeing 1st resistance at 108.74 area which is a Fibonacci retracement, Fibonacci extension and horizontal swing high area. Our first support area is at 107.90 where it is also a Fibonacci retracement, Fibonacci extension and Horizontal pullback support area. 

 

AxiTrader allows you to trade the US Dollar against the Japanese Yen (USDJPY) as a CFD.

 

FUNDAMENTAL ANALYSIS ON AUD

The AUD benefited on Friday as upbeat employment data from the US boosted global trade sentiment. Another risk barometer, the 10-year US treasury yield, also grew 8bps on Friday. It should also be noted that RBA's lack of policy guidance pushed investors towards expecting a halt in recent dovish bias by the Aussie central bank and helped the AUD as well. The risk tone remains under pressure during early-day after the US President Donald Trump’s everlasting criticism of the Fed’s monetary policy and also as China’s SCMP raising doubts on the US-China trade ceasefire. With a lack of major data/events on the economic calendar, investors might emphasize the trade related news as China is the world’s largest commodity user and have a great influence over the Antipodeans.

The already weak AUD/USD has extended losses following the release of the National Bank of Australia’s survey data. Australia’s business confidence index fell to 2 in June as expected from May’s print of 7. The RBA cut rates by 25 basis points to a record low of 1.25% in June. The move, however, failed to boost business confidence, as indicated by the NAB data.

Meanwhile, the conditions index ticked higher to 3 from May’s figure of 1 - possibly helped by the latest RBA cut to 1% - but so far, that has failed to put a bid under the AUD. In fact, the Australian currency is flashing red despite the rise in iron ore prices – one of Australia’s top exports. Notably, iron ore futures in China have extended gains to 5% this Tuesday morning, according to @YuanTalks.

The weakness in the AUD/USD pair could be associated with Friday’s upbeat US non-farm payrolls release and the drop in the odds of aggressive rate cuts by the US Federal Reserve.

KEY TECHNICAL LEVELS ON AUDUSD

(charts from www.tradingview.com)

AUDUSD is seeing support at 0.6956 which is a Fibonacci retracement, extension and a horizontal swing low level. The next big resistance is up at 0.7012 which is a Fibonacci retracement and a horizontal pullback resistance level.

AxiTrader allows you to trade the Australian Dollar against the US Dollar (AUDUSD) as a CFD. 

 

FUNDAMENTAL ANALYSIS ON NZD

Data due this week -- REINZ house sales and June food prices m/m on Wednesday; RBNZ Governor Orr speaks Thursday.

In an interview with Radio NZ on Tuesday morning, New Zealand’s (NZ) Deputy Prime Minister Winston Peters takes credit for a falling New Zealand dollar, but says the Government is not responsible for falling levels of business confidence. Amid the recent lack of catalysts from the US and New Zealand, the NZD/USD pair trades modestly flat near 0.6630 at the start of Tuesday’s Asian session.

Although likely weakness in lumber exports to China (third highest export earner for New Zealand) and fresh doubts over the US-China trade differences could have dampened the Kiwi, the latest improvement in market optimism helped the commodity basket and the commodity-linked currencies remain mostly positive on Monday.

As per the latest news report, be it from the US or China, the world’s two largest economies are far from a trade deal despite recently agreeing to halt the tariff war. The same exert downside pressure on the Antipodeans as China is the world’s top commodity user.

Elsewhere, China’s demand for the Kiwi logs has been deteriorating amid increasing supply at home, which in turn results into crashing prices of the economy’s third highest export earner and raises expectations of future hardships.

Moving on, investors await comments from the US Federal Reserve policymakers to extend latest positive momentum while New Zealand’s ANZ Truckometer can offer intermediate moves to trade.

 

KEY TECHNICAL LEVELS ON NZDUSD

(charts from www.tradingview.com)

NZDUSD is seeing major resistance around the 0.6661 area which is a 50% Fibonacci retracement, 100% Fibonacci extension and horizontal pullback resistance level. 

 

AxiTrader allows you to trade the New Zealand Dollar against the US Dollar (NZDUSD) as a CFD. 

 

FUNDAMENTAL ANALYSIS ON CAD

Canada usually posts a trade deficit, but the country finally broke through with a trade surplus in April. The surplus of C$0.8 billion was the first since August 2018. The week ended with sour employment numbers. Employment change came in at -2.2 thousand in June, the first decline in three months. This was well below the estimate of 10 thousand.  CAD also takes cues from Crude due to the nation’s heavy reliance on the commodity for export-earnings. The energy benchmark remains under pressure off-late despite the US-Iran geopolitical tension as doubts over the trade truce between the US and China keep weighing on market sentiment. BoC rate decision is due on Wednesday night. The BoC has not raised rates since October, and the markets are expecting rate-setters to hold the course at the upcoming meeting. The Bank will release a rate statement along with the monetary policy report. This will be followed by a press conference with BoC Governor Stephen Poloz. If the BoC sounds dovish about economic conditions, the Canadian dollar could lose ground.

KEY TECHNICAL LEVELS ON USDCAD

(charts from www.tradingview.com)

USDCAD is approaching major horizontal swing low support area at 1.3033. The next support is at 1.2961 which is a 78.6% Fibonacci retracement and 100% Fibonacci extension level. It is worth noting that USDCAD is under strong bearish pressure as seen in the Ichimoku cloud strength.

AxiTrader allows you to trade the US Dollar against the Canadian Dollar (USDCAD) as a CFD. 

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NFP increase by 224,000, most in 5 months.

NFP increased by 224,000, most in 5 months.