Analys från DailyFX
Dollar Eases Ahead of August NFPs
Talking Points
– Risk-appetite firms as G-20 conference yields little consensus on Syria.
– European currencies lag as secondary data miss.
– US Dollar eases ahead of August NFPs – only a short-term dip?
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INTRADAY PERFORMANCE UPDATE: 09:50 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.12% (-0.20%prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
Demand for higher yielding and riskier currencies has picked up overnight with the commodity FX bloc leading midway through the European trading session on Friday. The rebound in sentiment, in part, is due to continued gridlock among the G-20 leadership regarding Syria; and the less likely international conflict, the more secure investors are.
Elsewhere, in somewhat of a shift in recent trends, the British Pound is trailing as the European currencies on the whole experienced a bit of lighter data this morning. Of note, a dip in UK exports to countries outside the European Union suggests that the emerging market slowdown, including the BRICS, is starting to have a real negative impact on global growth. Data like this will be important to watch over the coming weeks.
For the Japanese Yen, an upbeat economic assessment resulting from the government’s Coincident Index – now signaling stronger economic growth – has reduced some of the pent up pressure this week regarding the impact of a sales tax hike on the Japanese economy and how it could stoke further easing from the Bank of Japan. The stronger the Japanese economy, the less necessary more intervention/stimulus from the BoJ.
Ultimately, today is all about the August US labor market report, and the US Dollar finds itself marginally lower on the day amid some profit taking. The Dow Jones FXCM Dollar Index hasn’t done much the past week, down only -0.20% over the past five-days. That should all change in a few hours.
A surprise to the upside is looking likely in the wake of incoming data. The ISM Services report surged to its highest level since December 2005, and the Employment subindex rose to 57.0 from 53.2, a sharp increase signaling accelerating labor growth. Such a figure is important considering that service jobs comprise approximately 80% of those in America.
Additionally, the recent Consumer Confidence report showed labor sentiment improved to a near five-year high, mirroring the improvement in Initial Jobless Claims, which are at a post-2008 crisis low. A drop in the Unemployment Rate to 7.3% (from 7.4% on the back of NFPs at +190K or higher (with estimates ranging as high as +240K) will bolster the September taper case and lift the US Dollar into the week’s end.
USDJPY 5-minute Chart: September 6, 2013 Intraday
Read more: RBA, ECB, BoE, Oh My! Central Banks Dominate Calendar; US NFPs Friday
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— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
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You can follow Paul on Twitter at@PaulRobinonFX.
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EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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