Sample Category Title

WTI oil stands at the back foot on Friday and eases from fresh high at $62.19 (the highest levels since mid-May 2015). Bearish signal was generated on Thursday's close in Doji and subsequent weakness on Friday, completing Evening Doji Star reversal pattern. Also, overbought daily studies add on negative signal developing on daily chart and risking stronger pullback, as soaring US production threats to undermine supportive factors from OPEC-led production cut and recent unrests in Iran. However, the move is so far seen as technical correction ahead of fresh attempts higher, as overall structure remains firmly bullish and favors dip-buying scenario. Rising 10SMA marks solid support at $60.15 which should ideally contain corrective dips.

Res: 62.02, 62.19, 62.71, 63.00
Sup: 61.14, 60.75, 60.15, 60.00

Spot Gold trades in red on Friday and pulls back from fresh nearly four-month high at $1326, posted on Thursday.

Stronger dollar in early Friday’s trading pushed yellow metal’s price lower, ahead of key release US NFP data, due later today.

Spot Gold is on track for the fourth straight weekly bullish close, on recovery rally from $1326 trough, with weekly close above cracked $1311 barrier (Fibo 61.8% of $1357/$1236 descend) to generate bullish signal.

Strong bullish setup of daily studies is overshadowed by overbought conditions which threat of corrective action, as gold held in uninterrupted rally for four weeks and profit-taking could be seen as likely scenario.

US jobs data could be a catalyst for correction on upbeat release. Break below strong supports at $1300 zone is needed to generate fresh bearish signal.

Otherwise, consolidation above $1300 support could signal fresh upside attempts towards next target at $1328 (Fibo 76.4% of $1357/$1236 descend).

Res: 1323, 1326, 1328, 1334
Sup: 1316, 1311, 1300, 1295

EUR/USD

Current level - 1.2053

The recent test of 1.2090 has failed and I favor a sell-off through 1.2035 to challenge 1.1960. Crucial on the upside is 1.2090 area.

USD/JPY

Current level - 113.20

The bias is still positive, for a rise towards 113.70 zone. Key static support is projected at 112.80.

GBP/USD

Current level - 1.3540

The recent rebound above 1.3495 is corrective in nature, so my outlook here is bearish below 1.3575 static resistance, for a slide towards 1.3460.

A prominent theme in 2017 was the solid pace of job creation in the US
The ADP national employment report sets the tone for the US NFP data

Today is the day- the most important economic data, the US Non-Farm Payroll number, on the face of the earth will reveal its colour. This number sets the trading tone and the trend for the rest of the month for traders. Today’s number would provide us significant clues if the moderate growth in the US economy has left any impact on the jobs market, most importantly on the wage growth. Since the financial recession, the jobs market has been strengthening and this momentum was set by former President Barak Obama and Mr Trump is reaping the rewards.

A prominent theme in 2017 was the solid pace of job creation in the US and this pushed the 12-month moving average to 170K but this number is well below (the moving average touched 260K in 2015) when Obama was in the office. So whatever you read in President Trump’s tweet, facts states a different story. However, to President Tump’s credit, companies in the US did add approximately 2.5 million workers in 2017.

The ADP national employment report sets the tone for the US NFP data and the number released yesterday was robust with a reading of 250K when the consensus was for 190K. The estimate for the US NFP data is for 190K which is slightly on the downside- compared to the November reading of 228K. Nonetheless, even 190K is above the underlying trend that is your 12, 6 and 3-month moving average. Given the seasonality factor for December; hiring trend start to tilt downward and becomes even worse in January, and the strong ADP report, we do think 210K could be the number that we would see today.

A gradual increase in the hourly wage earning isn’t going to ignite the fire for the US dollar. We think that we may see a minor uptick in this number by 0.1% from its previous reading of 0.2%. The average weekly hour number could remain stable in our estimate at 34.5 hours. however, if the number reverts to its 12-month average of 34.4, it may knock the dollar index lower.

The Aussie dollar dipped on Friday after posting new marginally higher high at 0.7869 of uninterrupted four-week rally, which was so far capped by falling weekly 200SMA.

Weaker than expected Australian data, released overnight, weighed on Aussie (trade balance showed a gap of A$628 million in November, missing forecast for A$550 million surplus).

Near-term focus is shifting lower as risk of pullback on overbought studies and profit-taking on month-long rally rises.

Stronger bearish signal will be generated on reversal of daily RSI and slow stochastic (which already turned south) from overbought zone.

Friday’s close in red will be also negative signal for bearish extension towards initial strong supports at 0.7816 (daily cloud top) and 0.7787 (rising 10SMA).

Meanwhile, US jobs data are eyed for fresh signals. Strong reading in Dec NFP would further accelerate pullback and generate stronger correction signal.

Conversely, weak jobs numbers would deflate the greenback and offer fresh support to the Aussie for renewed attempts through weekly 200SMA and attack at strong barrier at 0.7886 (Fibo 61.8% of 0.8124/0.7499 descend).

Res: 0.7856, 0.7886, 0.7897, 0.7977
Sup: 0.7834, 0.7816, 0.7787, 0.7777

The dollar holds firm tone against yen and extends recovery rally from strong support at 112.00 zone into third straight day. Fresh bullish acceleration on Friday broke above key barriers at 113.00 zone, consisting of converged 10/55/20SMA's and Fibo 61.8% of 113.63/112.05 downleg. The greenback maintains strong bullish sentiment, inflated by encouraging Fed's Dec meeting minutes and Thursday's release of US ADP private sector jobs data which is seen as an indication for more significant NFP report, due later today. ADP report showed stronger than expected increase of new jobs in private sector in Dec (250K vs 191K f/c), offsetting negative impact from unexpected jump in jobless claims previous week (250K vs 241K f/c). Traders are focusing on US Non-Farm Payrolls data, due later today, to get further information about the strength US jobs sector and fresh signals for the dollar. Forecast for NFP shows 190K new jobs added in December vs 228K in November. Solid numbers (200K and above) would be considered as supportive for the greenback and USDJPY could accelerate towards recent peaks at 113.63 (21 Dec) and 113.74 (12 Dec) which mark pivotal barriers, as repeated strong upside rejections occurred at these levels. Conversely, weaker than expected jobs numbers in December would put the greenback under pressure and risk return into daily cloud (cloud top lies at 112.78 and marks strong support, loss of which will be negative signal.

Res: 113.26, 113.38, 113.63, 113.74
Sup: 113.05, 112.93, 112.78, 112.43

Cable is struggling to regain 1.3600 handle which was cracked this week (Tue high 1.3600 / Wed high 1.3612) but without clear break higher, as bulls stalled and fell back to 1.3500 zone on Wednesday.

Thursday’s recovery sidelined immediate downside risk, with extended uptick today (1.3576) and subsequent pullback, signaling lack of strength.

Overall bullish techs continue to support for eventual break through 1.3600 and attack at key barrier at 1.3655 (2017 high).

US jobs data today are expected to generate fresh near-term direction signal.

Bullish scenario through 1.3600 and 1.3655 would open way towards psychological 1.4000 barrier.

Alternatively, loss of 1.3500 handle would be negative signal for deeper pullback towards 1.3465 (rising 10SMA) and 1.3424 (rising 20SMA) in extension.

Res: 1.3576, 1.3600, 1.3612, 1.3655
Sup: 1.3505, 1.3465, 1.3424, 1.3416

The Euro remains supported and attacked again the upper boundary of three-day congestion between 1.2000 and 1.2090. Thursday's bullish outside day is supportive, but the pair faces strong headwinds from 1.2100 resistance zone, which stayed intact after repeated attacks. Overbought daily studies also warn of stall here, which would be confirmed on close below 1.2000 pivot. Important releases today (EU CPI and US NFP) could be a catalyst. Stronger than expected EU inflation numbers (Dec CPI y/y 1.4% f/c vs 1.5% previous month) and weaker US jobs data (Dec f/c 190K vs 228K in Nov) could spark fresh bullish acceleration for final break above 1.2100 zone. Sustained break here is needed to signal continuation of strong recovery rally from 1.0340 (2017 low) towards target at 1.2166 (50% of 1.3992/1.0340, May 2014/Jan 2017 descend). Alternative scenario could be expected on EU CPI miss and overshoot in US NFP which would inflate the greenback and risk return below 1.2000.

Res: 1.2079, 1.2092, 1.2166, 1.2204
Sup: 1.2050, 1.2000, 1.1961, 1.1952

Here are the latest developments in global markets:

FOREX: The dollar index traded 0.1% higher during the Asian trading session Friday, after posting notable losses on Thursday.

STOCKS: The three major US equity indices – Dow Jones, S&P 500, and Nasdaq Composite – closed at fresh records again yesterday, with the Dow finishing above the 25,000 milestone for the first time. Futures tracking the Dow, S&P, and Nasdaq 100 are currently in the green as well. This positive sentiment rolled over into Asian trading, with Japan’s Nikkei 225 and Topix indices both gaining 0.9%, closing at fresh multi-decade highs. In Hong Kong, the Hang Seng was marginally higher, while in Europe, futures tracking the Euro Stoxx 50 were up by 0.1%.

COMMODITIES: Both WTI and Brent crude oil were down by 0.3% as the Asian session was coming to a halt, both giving back gains they posted on Thursday following a larger-than-anticipated drawdown in US crude inventories. Importantly though, oil prices remain elevated, trading near highs last seen in 2015, amid political tensions in Iran. Gold corrected lower by 0.3%, last trading at $1318 per ounce, after it found resistance around $1325 yesterday.

Major movers: Dollar tumbles despite strong data; yen on backfoot as risk appetite firms

The US dollar index tumbled by 0.4% on Thursday, unable to draw support from the stronger-than-anticipated ADP employment report released yesterday. The report showed that the private sector added 250k jobs in December, much more than the anticipated 190k. This figure is typically considered as a gauge of the nonfarm payrolls print, due out today. That said, one must note that the correlation between these two prints has fallen significantly in recent years.

The yen was on the defensive on Friday, with both dollar/yen and euro/yen being up roughly 0.3%. Given the absence of any major news from Japan, the currency’s underperformance is likely owed to the risk-on appetite of investors. Rising sentiment for risk in markets usually weighs on the yen, which is seen as a safe-haven asset.

The commodity-related currencies were mixed against the greenback. Aussie/dollar was down more than 0.2%, last trading at 0.7840 after touching the 0.7868 mark earlier. The tumble in the pair followed the release of Australia’s trade balance for November, which showed a surprising deficit instead of a surplus, likely generating concerns that GDP growth in Q4 may be weaker than previously anticipated. Both kiwi/dollar and dollar/loonie were higher, but only marginally.

Day ahead: US jobs data eagerly awaited with eurozone inflation also in focus

Eurozone flash inflation figures for the month of December will be made public at 1000 GMT. Headline and core inflation – the latter being the measure that excludes volatile food and energy items – are both anticipated to grow at a slightly softer pace relative to November’s respective readings and well below the European Central Bank’s target for inflation of below but close to 2%. An upside surprise in the data could lead market participants to revise their expectations for an end to the ECB’s QE program sooner rather than later, pushing the euro higher. Forex market participants will of course position themselves accordingly in case of a negative surprise as well.

All eyes today will be falling on the US nonfarm payrolls report for the month of December scheduled for release at 1330 GMT; a strong report is expected to lift the dollar and vice versa. The number of positions added to the economy during the month is projected to stand at 190k, below November’s 228k, and the unemployment rate is anticipated to remain at 4.1%, its lowest since January 2001. However, most attention could yet again be falling on wage growth: month-on-month, average earnings are forecast to grow at a slightly faster pace than in November and expand at the same 2.5% year-on-year rate as in the preceding month. An uptick in wage growth is likely to lead to rising price pressures, lending support to the Fed’s decision to deliver gradual rate hikes moving forward (or even support the case for more interest rate rises than would otherwise be delivered).

Important for loonie traders would be the release of Canada’s December jobs report due at the same time as the NFP report (1330 GMT). Data on the nation’s trade balance will also be made public alongside employment figures, while the Ivey PMI out on 1500 GMT might also attract some interest.

Other data of significance out of the US would pertain to November international trade figures (1330 GMT), November factory orders and durable goods (1500 GMT), and December’s ISM non-manufacturing PMI (1500 GMT).

In terms of policymakers’ appearances, Philadelphia Fed President Patrick Harker will be speaking on the US economic outlook at 1515 GMT and Cleveland Fed President Loretta Mester will be participating in a panel discussion titled “Coordinating Conventional and Unconventional Monetary Policies for Macroeconomic Stability” at 1730 GMT. Bank of England chief economist Andy Haldane will be chairing panel discussions at the Allied Social Sciences Association Annual Meeting; the relevant event begins at 1930 GMT.

In oil markets, the US Baker Hughes oil rig count due at 1800 GMT will be gathering attention.

Technical Analysis: Gold remains close to 3½-month high; warning sign by stochastics in very short-term

The overall bias for gold remains positive with the precious metal hitting a three-and-a-half-month high of 1325.88 during Thursday’s trading after advancing significantly over the last three weeks (and after recording a five-and-a-half-month low of 1,236.34 on December 12). The case for an overall bullish bias is also supported by the Tenkan-sen line being above the Kijun-sen one. However, the stochastics are giving a warning sign in the very short-term: the %K line has crossed below the slow %D line and both lines are pointing downwards, this being a bearish signal.

A strong jobs report out of the US is expected to lead to dollar strength and consequently weaken the dollar-denominated metal. In this case, the yellow metal might find support around the 61.8% Fibonacci retracement level at 1,311.12 of the September 8 to December 12 downleg.

A disappointment on the jobs front and thus dollar weakness, is likely to push gold higher. In such an event, the range around the 76.4% Fibonacci retracement level at 1,328.64 could act as a barrier to the upside. The area around this mark also encapsulates yesterday’s high of 1325.88, something which perhaps increases its significance.

WTI crude oil's bullish rally was eventually stopped during Thursday's trading session, near the fresh high of 62.18 resistance level. The price structure in the short to medium-term time frame is higher peaks and higher troughs above the ascending trend line, drawn from the low of June 21.

If buyers drive oil well above the 62.18 barrier, then the price could experience more upside extension, perhaps towards the 161.8% Fibonacci retracement level, of the last big down-leg move on the weekly chart, with the high at 55.39 and the low at 42.00, near 63.65. Having said that though, as the rally seems to be overextended, the likelihood is for the bears to take charge for a downward correction and push the price lower at 59.00.

The notion of a retracement is also supported by the oscillators in the near-term. The RSI indicator is still holding in the overbought zone; however, it lost its strong upside momentum and is flattening. In addition, the MACD oscillator stands above its trigger and zero lines with a weakening momentum.

It is worth mentioning that even if prices retreat for a while, as long as the market is developing above the uptrend line, the short to medium-term outlook remains to be positive. An expose below the 61.8% Fibonacci mark of 50.40 would hint a trend reversal.