EURGBP Channel Resistance (Jan 05, 2018)
EURGBP is trending lower in a shallow descending channel visible on its 4-hour chart. Price is approaching the channel resistance at the .8950 minor psychological level and might be due for a bounce.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that the downtrend is more likely to resume than to reverse or that the top of the channel would probably keep gains in check. However, the gap between the moving averages is narrowing to suggest a potential upward crossover or pickup in bullish momentum.
Stochastic is pointing down from the overbought region, though, so sellers could still pick up their pace. In that case, EURGBP could slide back down to support at the .8700 handle.
Economic data from the UK turned out stronger than expected as the services PMI rose from 53.8 to 54.2, a notch higher than the 54.1 consensus. Euro zone medium-tier reports also printed a few higher than expected figures as well.
German retail sales, French preliminary CPI, and the region’s flash CPI readings are up for release today. Another round of upbeat results could continue to stoke expectations of ECB rate hikes later this year, following their taper plans this month.
There are no major reports due from the UK for the rest of the day, so pound price action could take its cue from other headlines, such as those related to Brexit.
By Kate Curtis from Trader’s Way
USDJPY Triangle Resistance (Jan 09, 2018)
USDJPY has formed lower highs and found support at the 112.00 major psychological level, creating a descending triangle pattern on its 4-hour time frame. Price bounced off the bottom to make another test of resistance, which appears to be keeping gains in check for now.
The 100 SMA is above the longer-term 200 SMA ,though, which means that the path of least resistance is to the upside. This suggests that a break higher could be possible, sending price up by around 150 pips or the same height as the chart formation.
Stochastic is on its way down, signaling that sellers could regain the upper hand. If so, USDJPY could still make its way back down to the triangle support and keep trading sideways.
The dollar caught a bid against its peers when the consumer credit report posted a stronger than expected result. Credit card spending leading up to the Thanksgiving holidays buoyed debt up from $20.5 billion to $28 billion in November while auto and student loans also ticked higher.
The S&P and Nasdaq continued their push for another round of record highs but the Dow closed in the red. FOMC members Bostic and Williams shared their views on the economy and warned of potentially weaker inflation weighing on rate hike prospects.
Only medium-tier reports such as the NFIB Small Business index and JOLTS job openings data are due from the US today. Japan just printed its average cash earnings report and showed a stronger than expected 0.9% gain versus the 0.6% consensus. Japanese consumer confidence data is due next and a gain from 44.9 to 45.1 is eyed.
By Kate Curtis from Trader’s Way
Another USDJPY Triangle Bounce (Jan 10, 2018)
USDJPY is still trading inside its descending triangle pattern and has just bounced off the resistance previously highlighted. Price is now making its way back to support at the 112.00 major psychological level for another test.
The 100 SMA is above the longer-term 200 SMA on the 4-hour time frame, so the path of least resistance is to the upside. This means that a bounce is more likely to happen than a breakdown. Still, a breach of support could lead to a 150-pip drop or the same height as the chart formation.
Stochastic is heading south to show that sellers are on top of their game, but the oscillator is dipping into oversold territory to indicate bearish exhaustion. Turning higher could draw buyers back in and lead to a move up to the triangle resistance near the 113.00 mark.
The BOJ recently surprised the markets by tapering its bond purchases, leading many to believe that the central bank is shifting to a less dovish stance. Weaker than expected data from the US also weighed on the dollar later in the day, but the US currency is able to draw some support from rising equities and bond yields.
Data from Japan came in mixed, with average cash earnings up 0.9% versus the estimated 0.6% uptick and the consumer confidence figure slipping from 44.9 to 44.7 instead of improving to 45.1. US JOLTS job openings and NFIB Small Business Index both disappointed.
Up ahead, US import prices and final wholesale inventories data are due. Traders are likely to keep close tabs on bond yields and stock market performance to gauge if dollar strength can be sustained.
By Kate Curtis from Trader’s Way
EURAUD Countertrend Play (Jan 11, 2018)
EURAUD has been trading in a descending channel pattern on its 4-hour time frame and has recently bounced off the resistance. Price is also breaching the middle of the channel to show enough downside momentum to reach the bottom.
The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside, which means that the selloff could carry on. Stochastic is turning back down as well, so price could follow suit.
However, the channel support might keep near-term losses in check and trigger another bounce to the resistance. A long opportunity arises but could be risky since it would run counter to the trend.
Australia just reported stronger than expected retail sales growth of 1.2% versus the 0.4% forecast and the earlier 0.5% gain. Earlier in the week, Australia’s building approvals also impressed with a 11.7% jump versus the estimated 0.9% drop.
Data from China last week has also been positive for the Aussie, as gains in the manufacturing and non-manufacturing PMIs spurred expectations of stronger commodities demand. Chinese trade balance is due on Friday and a wider surplus is eyed.
Meanwhile, the euro has tumbled on weaker European equities performance as risk aversion took hold. Interestingly enough, this has been positive for the Aussie as it took part in gold rallies.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
USDCAD Support Turned Resistance (Jan 12, 2018)
USDCAD recently broke through the floor around the 1.2650 minor psychological mark then fell to a low of 1.2362. Price is showing signs of a pullback from its drop and sellers may be waiting at the nearby resistance levels.
Applying the Fib tool on its latest swing high and low shows that the 50% to 61.8% levels are close to the broken support, which might now hold as resistance. The 100 SMA is also around this area and is below the longer-term 200 SMA to signal that the path of least resistance is to the downside.
Stochastic is already turning lower to indicate a pickup in selling pressure. This suggests that the current barrier around the 38.2% Fib might be enough to keep gains in check and push the pair back to the swing low or lower.
US PPI turned out weaker than expected and weighed heavily on the dollar as this spurred downbeat expectations for CPI. Recall that policymakers have been stressing the weaker inflation outlook as a potential reason to slow their pace of tightening.
US retail sales are also due later today and the headline figure could show a 0.5% uptick. The core version of the report is expected to show a 0.3% gain but there could be a chance for an upside surprise as holiday sales have been strong.
Meanwhile, the Canadian dollar drew some support from rising crude oil prices on the heels of lower US stockpiles and production. Upbeat data from China has also supported demand expectations, which is also positive for the commodity and risk-taking.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
USDJPY Broken Support Retest (Jan 16, 2018)
USDJPY recently fell through support at the 112.00 major psychological level and looks ready for a pullback to this area of interest. Applying the Fib tool on the latest swing high and low shows that the 61.8% level is close to this broken support, which might now hold as resistance.
Stochastic is pulling up from the oversold region to indicate a return in buying pressure. However, a shallow pullback to the 38.2% Fib might be enough to let the selloff resume.
The 100 SMA is crossing below the longer-term 200 SMA to signal that the path of least resistance is to the downside. This means that the downtrend is more likely to continue than to reverse.
The dollar has been on very weak footing despite a few upside data surprises. Banks were closed on a holiday yesterday, so the usual stock market rallies weren’t there to buoy the currency higher.
Only the Empire State manufacturing index is due today and a gain from 18.0 to 18.5 is expected. Stronger than expected results, combined with positive earnings data, could lead to a pickup for the dollar.
Still, it’s worth noting that the BOJ recently made some adjustments to its bond purchases, leading traders to speculate that tapering is in order. For now, doubts about the Fed’s pace of tightening remain owing to a weaker inflation outlook
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
NZDUSD Ascending Trend Channel (Jan 17, 2018)
NZDUSD is trending higher on an ascending channel visible on its 1-hour and 4-hour chart. Price is currently testing support and might be due for a move back to the resistance soon.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This signals that the uptrend is more likely to resume than to reverse. Also, the short-term moving average lines up with the channel support to add to its strength as a floor.
Stochastic seems to have pulled up from the oversold region to indicate that buyers would take over. However, the oscillator has yet to make headway north to show a pickup in buying pressure.
The Kiwi has been able to take advantage of dollar weakness for the most part of the week as risk-taking is present and demand from China could be sustained. However, economic data from New Zealand came in weaker than expected today as ANZ reported a 2.2% drop in commodity prices after the earlier 0.9% dip.
In the US, the Empire State manufacturing index slipped from 18.0 to 17.7 instead of rising to the consensus at 18.5. Today has the industrial production and capacity utilization rates due. FOMC member Mester also has a speech lined up after the release of the Fed Beige Book.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
GBPAUD Trend Line Retest (Jan 18, 2018)
GBPAUD recently fell through the rising trend line on its 4-hour time frame, indicating that a reversal is in order. Price is showing a pullback now, and applying the Fib tool shows that the 61.8% retracement level lines up with the broken support zone.
The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Stochastic is still pointing up to signal that buyers are in control but reaching overbought levels could draw more sellers in.
Economic data from Australia turned out stronger than expected, as the employment change figure printed a 34.7K gain versus the estimated 13.2K increase. The previous reading enjoyed an upgrade from 61.6K to 63.6K.
However, the unemployment rate increased from 5.4% to 5.5% instead of holding steady. As it turned out, the participation rate rose a couple of notches from 65.5% to 65.7%.
Meanwhile, the pound is still weighed down by Brexit concerns and to some extent, the Carillion collapse. There are no major reports due from the UK today. China has a number of top-tier reports due, though, and this could influence Aussie action still.
GDP, retail sales, industrial production, and fixed asset investment are expected to tick lower and might reflect weaker global demand for commodities. Stronger than expected results, on the other hand, could be bullish for the Aussie.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
GBPAUD Area of Interest (Jan 19, 2018)
GBPAUD has been trending inside a long-term ascending channel visible on its daily time frame and is testing support at the mid-channel area of interest. This lines up with the 50% Fibonacci retracement level which already seems to be holding as support.
The 100 SMA is still above the longer-term 200 SMA to signal that the path of least resistance is to the upside or that the rally is likely to resume. These moving averages are also around the 50% Fib level.
Stochastic is on the move up to show that buyers are in control, but the oscillator is nearing overbought conditions. Turning lower could draw sellers back in and lead to a drop to the channel support closer to the 61.8% Fib at 1.6400.
Economic data from Australia turned out stronger than expected this week as the jobs report showed a 34.7K gain versus the estimated 13.2K increase for December while the previous month’s figure enjoyed an upgrade.
Data from China came in mostly in line with expectations. Fixed asset investment was unchanged at 7.2% instead of falling to 7.1% while industrial production ticked slightly higher.
The focus could shift back to the pound today as the UK will release its retail sales report. A drop of 0.8% is eyed, erasing part of the 1.1% gain in the earlier period, but the pickup in holiday spending could still lead to an upside surprise.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
EURUSD Short-Term Channel (Jan 22, 2018)
EURUSD continues to advance and positive updates from Germany’s coalition talks over the weekend could sustain the climb. However, price is hitting a roadblock at its short-term channel resistance and might need a correction before heading further north.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the channel support is in line with the 61.8% level at 1.2100. The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. Also, the 100 SMA lines up with the channel support to add to its strength as a floor.
Stochastic is pointing down to show that sellers are returning even without seeing overbought conditions. Reaching the oversold level and turning back up could draw more buyers to the game and possibly even lead to a break past the channel resistance.
Flash PMI readings from Germany and France are lined up from the euro zone this week, and these usually provide strong clues on how the economy might fare in the next few months. However, traders are starting to get concerned about the shared currency’s appreciation as some ECB officials pointed out that this could dampen inflation. The ECB decision is also scheduled this week.
Apart from that, German coalition updates continue to push the shared currency around as the prospect of political uncertainty has been bearish. On the other hand, a definitive agreement between Merkel’s party and SPD could lead to more gains.
As for the dollar, government shutdown concerns have been mostly bearish for the currency over the past week and could continue to weigh on US assets while it lasts. Only the advanced GDP report is due from the US this week, but the attention could be fixed on Washington.
By Kate Curtis from Trader’s Way
GBPUSD Channel Top (Jan 23, 2018)
Cable has been climbing steadily and is testing the top of its ascending channel visible on the daily chart. This could provide a countertrend opportunity for a pullback to the channel support or at least until the mid-channel area of interest.
The 100 SMA is above the longer-term 200 SMA on this time frame, so the path of least resistance is to the upside. This means that price could still make a strong break past the channel resistance and start a steeper uptrend.
However, stochastic is already indicating overbought conditions, so bulls must be exhausted. If selling pressure takes over, a pullback could be underway until the 1.3500 levels.
Brexit updates have mostly been bullish for the pound as the government is making more progress in drafting its transition plans. Data from the UK last week has mostly disappointed and this week has the jobs report due.
Analysts expect a lower claimant count change of 2.3K compared to the earlier 5.9K increase in joblessness. The unemployment rate could hold steady at 4.3% while the average earnings index could also stay at 2.5%. Stronger than expected results could lead to expectations of upbeat consumer spending and inflation numbers down the line.
As for the dollar, the currency barely drew support from news that the US government shutdown is over. Risk appetite is keeping a lid on the safe-haven currency’s gains for now and there are no major reports due next.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
USDCAD Bearish Flag (Jan 24, 2018)
USDCAD has been treading mostly sideways in the past few days and is consolidating inside a bearish flag formation visible on the daily time frame. Price is currently testing the triangle support and a breakdown could send it to the lows around 1.2100.
On the other hand, an upside break could take it up to the resistance at 1.2900. The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside, which suggests that a move lower is more likely to happen than a break higher. In addition, the 100 SMA could add an extra upside barrier around 1.2600.
Stochastic is pulling up from oversold levels, though, so bulls are taking over while bears are taking a break. In that case, USDCAD might still bounce back up to the top of the small triangle formation before picking a clear direction.
The Loonie was able to draw some support from more upbeat discussions on NAFTA as some key members of the negotiating teams acknowledged that progress is being made. Trump still looks willing to walk out if Canada or Mexico don’t give in to U.S. demands in the auto industry but other sectors could see more developments.
In contrast, the dollar was the weakest currency for yet another day as risk-taking and weak data dragged it down. Safe-haven flows also moved to the Japanese yen and Swiss franc instead.
Up ahead, the crude oil inventories data could lead to more volatility for the oil-related Loonie and a buildup might be reported after the API capped off its streak of reductions. Analysts are still expecting a draw of 1 million barrels in the EIA report but there could be room for a downside surprise.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
NZDUSD Trend Line Bounce (Jan 25, 2018)
This pair has been trending higher, moving above an ascending trend line on the 1-hour time frame and just bouncing off support. A rally could take it up to the latest highs near .7425 and beyond.
The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside or that the rally is more likely to continue than to reverse. Also, the 100 SMA has held as dynamic support as it lines up with the trend line.
Stochastic is also pulling up from oversold conditions to show that bullish momentum is returning. Another dip could find support at the trend line that’s been holding since last year or at the 200 SMA line in the sand for the uptrend.
New Zealand printed weaker than expected quarterly CPI of 0.1% versus the estimated 0.4% gain and down from the previous 0.5% figure. Underlying data revealed that this was mostly due to lower retail prices and automobile costs, which could push RBNZ tightening expectations back further.
However, dollar weakness has been in play again after Treasury Secretary Mnuchin remarked in the Davos summit that a weaker dollar is good for trade. Fears of a trade war, particularly with China, have also weighed on the currency.
Apart from that, the presence of risk appetite in the markets has been bearish for the safe-haven dollar. US data also turned out mostly weaker than expected, keeping traders doubtful about the Fed’s tightening plans this year.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
USDCAD Triangle Pullback (Jan 26, 2018)
USDCAD recently broke to the downside of its symmetrical triangle formation and fell to a low of 1.2240. Price has bounced since then and appears to be making a correction to the broken support around 1.2420.
Applying the Fib retracement tool on the breakout move shows that the 61.8% level is closest to the broken support but the pair seems to be finding resistance at the 50% level already. Stochastic is also on the move down to reflect a return in selling pressure.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. These moving averages are also close to the area of interest, adding to its strength as potential resistance. If it holds, the pair could fall back to the swing low or lower.
The US dollar drew some support in the New York session as US President Trump said that he sees the currency getting stronger and stronger. He also said that Treasury Secretary Mnuchin’s remarks on a weaker dollar being good for trade as taken out of context.
Data from the US turned out mixed as the initial jobless claims rose from 216K to 233K but was better than the estimated 239K figure. New home sales sank from a downgraded 689K figure to 652K versus the estimated drop to 627K. Advance GDP data is due next and a 3.0% growth figure is eyed.
As for the Canadian dollar, the currency could find some support from oil prices and more positive updates from NAFTA. Retail sales turned out mixed as the headline figure disappointed but the core reading showed a 1.6% gain versus the estimated 0.8% uptick. Canada’s CPI readings are lined up next.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
GBPJPY Ascending Channel (Jan 29, 2018)
GBPJPY is trending higher and looks ready for a test of its ascending channel support. Applying the Fib tool on the latest swing low and high shows that the 61.8% level lines up with support at the 152.50 minor psychological level.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This signals that the rally is more likely to resume than to reverse. In addition, the 100 SMA lines up with the 50% Fib at 153.00 and the 200 SMA is closer to the channel bottom.
Stochastic is still heading lower for now to indicate that selling pressure is in play. However, the oscillator is nearing oversold conditions to show that pound bears might be exhausted and buyers could take over.
A number of medium-tier reports are due from the UK for the first half of the week before the manufacturing and construction PMIs are released during the latter half. Apart from that, Brexit-related updates could also push the pound around.
Meanwhile, the Japanese yen doesn’t have plenty of top-tier catalysts on deck, but it could take its cue from dollar price action stemming from the FOMC decision. Market sentiment and global bond yields could also dictate yen movement.
Medium-tier reports from Japan include household spending, retail sales, and the unemployment rate due in the next Asian session. The UK has net lending to individuals, mortgage approvals, and the BRC price shop index.
By Kate Curtis from Trader’s Way
USDJPY Range Support (Jan 30, 2018)
USDJPY has been moving back and forth inside a range with support at the 109.00 major psychological level and resistance at 114.00. Price is currently testing support and might be due for another bounce back to the top or halfway there.
Stochastic is already indicating oversold conditions and turning higher to signal a pickup in bullish pressure. A slight bullish divergence can be seen as price made lower lows while the oscillator had higher lows since January 12.
The 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is to the upside, which suggests that support is more likely to hold than to break. Still, a move lower could lead to a drop of around 500 pips or the same height as the rectangle pattern.
The dollar rebounded against most of its counterparts in recent trading sessions as global tightening expectations picked up on remarks from a few central bank officials. Economic data turned out mostly upbeat, with the core PCE price index rising from 0.1% to 0.2% and the personal income figure up by 0.4% versus the 0.3% forecast. Personal spending, however, fell short at 0.4% versus the 0.5% consensus.
In Japan, data was weaker than expected. Household spending is down 0.1% on a year-over-year basis instead of the estimated 1.6% figure and the earlier 1.7% increase. The unemployment rate also ticked up from 2.7% to 2.8% but this was mostly due to an increase in the labor force and in the participation rate.
https://www.tradersway.com/var/tw/storage/images/media/images/180130_usdjpy4/1892046-1-eng-US/180130_usdjpy.jpg
The US CB consumer confidence index is due today but the focus could be on the FOMC decision and NFP release later on. Most market analysts appear doubtful that the dollar bounce could last, although it could hinge on sentiment and bond yields from here.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
EURUSD Short-Term Trend Line Bounce (Jan 31, 2018)
EURUSD has been trending higher over the past few weeks and is currently above a steep rising trend line on its 1-hour chart. Price is bouncing off this support zone, which lines up with the 50% Fibonacci retracement levels, and is setting its sights on the swing high around 1.2525.
The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside. This short-term moving average also appears to be holding as dynamic support, but a larger dip could still find a floor at the 200 SMA dynamic inflection point near the 61.8% Fib.
Stochastic is still on its way down and has yet to indicate oversold conditions, which means that sellers could still have the upper hand for now. This could keep the correction going until the oscillator turns up from oversold levels.
Economic data from the euro zone came in mixed, with French flash GDP up by 0.6% versus the estimated 0.5% expansion. German preliminary CPI turned out below expectations with a 0.7% drop, though, lower than the estimated 0.5% dip. The region’s flash GDP came in line with estimates of a 0.6% growth figure.
The dollar struggled to hold its ground on risk aversion and rising US bond yields but wound up weakening to most of its rivals ahead of the State of the Union Address and FOMC decision. Month-end profit-taking could also be blamed for the dip.
Up ahead, the Chicago PMI and ADP non-farm employment numbers are also due and these could shape expectations for Friday’s NFP report. Stronger than expected data, combined with hawkishness from the Fed, could allow the dollar to make a stronger rebound.
By Kate Curtis from Trader’s Way
AUDUSD Ascending Channel (Feb 01, 2018)
AUDUSD continues to trend higher inside its ascending channel pattern on the 4-hour time frame. Price is currently testing the channel support and might be due for a bounce to the top.
The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside. This means that the rally is more likely to resume than to reverse. Still, a break below the channel support could find a floor at the 100 SMA dynamic inflection point.
Stochastic is still on the move down to indicate that selling pressure is present. The oscillator is near oversold conditions, though, so sellers might want to take a break soon and allow buyers to take over. In that case, the pair could recover to the top of the channel near .8200.
Australia’s quarterly CPI readings turned out slightly weaker than expected as the headline figure came in at 0.6% versus 0.7% while the trimmed mean CPI was at 0.4% versus 0.5%. Private sector credit also fell short of estimates at 0.3% versus 0.5%.
Meanwhile, data from China was mixed as the official manufacturing PMI fell from 51.6 to 51.3 while the non-manufacturing component improved from 55.0 to 55.3. The Caixin version of the manufacturing PMI held steady at 51.5 as expected.
Earlier today, data from Australia also turned out mixed. The AIG manufacturing index printed a gain from 56.2 to 58.7 while import prices popped up by 2.0% to reflect stronger inflationary pressure. Building approvals, however, slipped 20%.
The FOMC statement led to a bit of a boost for the dollar on stronger inflation expectations and the addition of the word “further” in projecting more tightening moves. The next event risk for the dollar could be the NFP release on Friday and the ADP report hinted at a potential upside surprise.
By Kate Curtis from Trader’s Way
USDJPY Channel Resistance (Feb 02, 2018)
USDJPY is trending lower on its 4-hour time frame, moving inside a descending channel pattern. Price is currently testing the channel resistance around 109.50 and might be due for a move back to the bottom or the swing low.
The top of the channel lines up with the 50% Fibonacci retracement level that might be enough to keep gains in check. A higher correction could last until the 61.8% Fib closer to the 100 SMA dynamic inflection point. This short-term moving average is below the 200 SMA so the path of least resistance is to the downside.
Stochastic is also turning lower from the overbought area to signal a pickup in selling pressure. A bearish divergence can be seen as price made lower highs while the oscillator had higher highs since mid-January.
Economic data from the US was mostly stronger than expected but this failed to give the dollar a strong lift. The ISM manufacturing PMI fell from 59.7 to 59.1 to reflect a slower pace of industry growth, but the reading was better than the 58.7 consensus. However, the jobs component posted a sharp decline, leading to downbeat expectations for the NFP.
Analysts are expecting to see an increase of 181K in hiring, slightly stronger than the earlier 148K gain. The ADP report has beat expectations, but it’s also worth noting that the earlier figure was downgraded. Also, Challenger job cuts were up 37.7% for January.
https://www.tradersway.com/var/tw/storage/images/media/images/180202_usdjpy/1892172-1-eng-US/180202_usdjpy.jpg
As for the yen, data from Japan has been mixed, with the final manufacturing PMI enjoying an upgrade and retail sales beating expectations. Household spending and housing starts fell short of estimates while the jobs report showed promising components.
[I]By Kate Curtis from [URL=“https://www.tradersway.com/”]Trader’s Way[/URL][/I]
1 Like
USDCAD Descending Channel (Feb 5, 2018)
USDCAD popped up from support around the 1.2250 minor psychological level to the 1.2400 area, which lines up with an area of interest. This could also serve as resistance of the new descending channel forming on the 4-hour time frame.
Stochastic is indicating overbought conditions to show that buyers are feeling exhausted and could let sellers take over. If so, the pair could fall back to the swing low or the bottom of the channel.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. This suggests that the selloff is more likely to continue than to reverse. However, price has already closed above the 100 SMA to signal strengthening bullish momentum.
Stronger than expected US economic data led to a dollar rally on Friday, with the NFP printing a 200K gain in hiring for January versus the estimated 181K increase. To top it off, the December figure was upgraded to 160K.
The unemployment rate held steady at 4.1% as expected while the average hourly earnings figure beat expectations with a 0.3% increase versus the estimated 0.2% uptick. The previous reading also enjoyed a positive revision to 0.4%.
https://www.tradersway.com/var/tw/storage/images/media/images/180205_usdcad_1/1892199-1-eng-US/180205_usdcad_1.png
The ISM non-manufacturing PMI is due today but might not have such a huge impact on the dollar since the jobs report was already released. Canada has its trade balance on Tuesday and its own jobs report lined up on Friday.
By Kate Curtis from Trader’s Way
