Safe haven yen outperforms while Canadian dollar lags
Markets set to get volatile with the release of tomorrow’s US Non-Farm Payrolls report and equities in a volatile state.
EUR/USD: Finishing higher but still within its bear trend channel
Yesterday's US Automatic Data Processing (ADP) Non-Farm estimate came in slightly below expectations, ahead of tomorrow's infamous Non-Farm Payrolls (NFP) report that is set to keep markets volatile, and technicals far less relevant. As for today, we've got a German bank holiday and services Purchasing Managers' Index (PMI) figures for the Eurozone, and with evening attention shifting to the US to see what Institute for Supply Management's (ISM) service PMI figure will look like following Tuesday's manufacturing contraction. Contrarian breakouts will be more ideal given increased volatility once the news hits.
GBP/USD: Further oscillatory movement within its current consolidatory technical state
UK PM Johnson gave a speech regarding a new proposal to the EU that would involve compromises on both sides, though warned that a no-deal Brexit would be the outcome should both sides not come to an agreement. In data, UK construction PMI showed contraction at a worse than expected pace, with a 43.3 reading below its previous 45.0. Services is up next later today and while expectations are for an above 50 figure, there isn't much room for error following last month's 50.6 reading. After that, it'll be the USD aspect of this pair (and those of other USD-denominated pairs in this report) that will be in focus, with significant data both today and tomorrow. Going into tomorrow's NFP report, retail traders are holding a heavy long 74% bias, while institutional bias is an extreme short 81%.
USD/JPY: Yen outperforms against the FX majors as investors flee to safety
With equities in retreat, it was a clear risk-off play that saw investors flee to safety and aid the safe haven Japanese yen in finishing higher against the greenback and outperforming against all the FX majors (the safe haven Swiss franc underperformed following a -0.1% Consumer Price Index (CPI) reading). That meant a further drop in this pair's price, closer to its 200-day moving average and back beneath nearly all its main long-term moving averages. It also meant that the weekly bear trend channel has remained roughly intact after a few brief scares. More risk-related data will be released with PMIs today and tomorrow's NFP, and hence directly affecting the US dollar and indirectly affecting the yen via risk. Bank of Japan's Funo today morning highlighted downside risks to the global economy, intending to "reexamine economic and price trends at the next policy setting meetings.”
USD/CAD: Canadian dollar underperforms significantly
In terms of data, the Canadian dollar won't have any significant items on the economic calendar neither in terms of Canadian data or that of oil given service PMI figures today aren't as energy intensive as manufacturing, and as a result it's the USD aspect of this pair to be on the look out for. From a technical standpoint – and it carries less weight with tomorrow's fundamental data – it’s showing far more positive bias given its technicals are closely huddled, and with its price crossing above all its main log-term moving averages in one fell swoop as the Canadian dollar underperformed against the remaining FX majors. That has hurt retail bias which is up 12% as long positions dwindle.
AUD/USD: Retracing back up but still under long-term pressure
This morning's Australian Industry Group's (AIG) services PMI figure showed a 51.5 reading which was little changed from last month's 51.4 expansion, and with its trade surplus slightly below expectations. However, the real dent in this pair's price has been risk related given its high-beta nature, and following last Tuesday's Reserve Bank of Australia (RBA) 0.25% rate cut that has kept the pair's price movement bearish (to say the last). Tomorrow we'll get retail data and the Reserve Bank of Australia's (RBA) Financial Stability Review before US tier 1 data later in the day. From a technical standpoint, little is needed to shift to an initializing bear trend as its mid-term support level is holding despite negative technicals and with a negative DMI cross occurring yesterday.
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