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Oil price rallies and resumes the upside momentum also because the USD/CAD has touched fresh new lows on Thursday. Brent managed to climb above the 54.50 psychological level and is targeting new highs if will have enough energy to stabilize somewhere above this level

Price increased sharply also because the USD is weakened by the United States data, the greenback has taken another hit from the Unemployment Claims today, which have reached the highest level since March 5, 2015. The Initial Claims were reported at 298k jobs in the previous week, much higher versus the 245K estimate.

The Brent Oil stays higher even if the United States Crude Oil Inventories have increased more than expected in the previous week. The Crude Levels were reported at 4.6 million barrels, beating the 4.1M estimate.

You can see that the Brent Oil has managed to jump above the warning line (WL1) of the descending pitchfork and tries also to close above the 54.56 previous high. The breakout needs confirmation, so only a retest of the warning line (WL1) will confirm a further increase towards the $57 per barrel. Could come to retest also the 61.6% retracement level before will climb towards fresh new highs. Personally, I would like to see a minor consolidation before will increase further, needs to capture more directional energy to be able to approach and reach the median line (ML) of the major ascending pitchfork.

EURUSD - With the pair seen rallying strongly on Thursday, further bullishness is likely in the days ahead. Resistance comes in at 1.2069 level with a cut through here opening the door for more upside towards the 1.2100 level. Further up, resistance lies at the 1.2150 level where a break will expose the 1.2200 level. Its daily RSI is bullish and pointing higher suggesting further upside pressure. Conversely, support lies at the 1.2000 level where a violation will aim at the 1.1950 level. A break of here will aim at the 1.1900 level. Below here will open the door for more weakness towards the 1.1850. All in all, EURUSD faces further upside towards its key resistance.

Draghi the Master of Central Bank Voodoo

The master of central bank voodoo was at it again. Mario Draghi did cast a pale shadow over the euro strength, but the level of intervention rhetoric was so mild it did not distract the Euro bulls from adding on more Euro risk.

The EUR bulls are anticipating bullish near term fundamentals whilst Draghi smoothed the path to reducing and then ending the asset purchase program.

However, the labouring USD played a significant role in last nights EURO rally after a higher than expected U.S. initial jobless claims sent the greenback tumbling into the ECB meeting.

As for the USD part of the market geometry, traders are concerned that the impact from Hurricane Harvey are causing data distortions and these data skews may cause the Fed to sit on their hands for the rest of 2017

Investors have renewed their interest on the US political overhang as the political landscape continues to weigh heavily on the dollar. Specifically, the long and winding and no less bumpy road to tax reform look more of a pipe dream now than ever. Also, uncertainty reigns over Yellen’s replacement which is adding another unwanted layer of confusion to an already politically muddled landscape.

The Fed’s Dudley has just finished delivering an economic outlook speech to the Money Marketeers of New York University. His comments are very much in line with his previous statements where he has argued for further tightening in addition to shrinking the balance sheet. Not much reaction off the banter bat as traders will be looking to trim not add risk heading into the weekend, especially long dollar risk.

EURO

US data didn’t do the wobbly dollar any favours overnight, and with no real push back on Euro strength from Super Mario, the overnight session has been more or less a running of the EURO bulls. Look for the weaker dollar narrative to lead the way for a possible move higher on the EUR

Japanese Yen

While there was little cause to be long USDJPY above 109 yesterday, we could be in for some absorbing price action soon. Besides the usual position squaring effect into weeks end, lots of chatter on the street about the fact central bank pricing can’t get any more dovish. The 108.00 level may shape up to be a considerable battle ground between the dollar bulls and the short term risk aversion flows. But the long trade is fraught with danger as Saturday feared missile launch could become a reality leading to a very messy Monday open

Australian Dollar

The main reason the Aussie is trending towards a two year high is the market continues to reprice the dovish Fed narrative with the December rate hike probabilities running near 30 % down from 37% yesterday. Weaker Dollar and increasing investor risk appetite screams long Aussie

The Canadian dollar continues to gain after the surprise announcement by the Bank of Canada (BoC) of raising its benchmark rate by 25 basis points. Canadian economic indicators were lower than expected with building permits falling 3.5 percent and the Ivey purchasing managers index (PMI) falling to 56.3 but with a positive indicator being employment continues to rise in what could be a preview of Friday’s Canadian jobs report.

The CAD advanced thanks to two factors. The aftermath of the BoC decision still lingers in the market. While not a total shock as a rate hike was expected, markets were anticipating a later date most likely the October meeting for the announcement. A Reuters poll shows that economists are seeing no more rates hikes in 2017 from Governor Poloz unless the strong pace of growth continues.

The other factor was the weakness of the USD. The dollar struggled on Thursday across the board as natural disasters and political drama sapped any traction that the currency could muster. Inflation data next week will guide markets as the probability of a third rate hike by the Fed this year looks even more remote.

The USD/CAD lost 0.678 percent in the last 24 hours. The currency pair is trading at 1.2141 after the USD underperformed on Thursday while the loonie is still riding high in the aftermath of the surprise rate hike from the Bank of Canada (BoC). The Canadian benchmark rate is now 1 percent, and the interest rate raise was not a total surprise, it was anticipated to be in October, but the BoC followed through on the hawkish rhetoric it launched in June amongst other central banks only to see them backtrack.

Canadian employment data will close a strong week for the CAD. The economic consensus is for another gain of 15,000 jobs in August, keeping the unemployment rate at 6.3 percent.

US unemployment claims climbed to a two-year high due to the impact of Hurricane Harvey. Initial jobless claims rose to 298,000, beating estimates of 242,000. Employment has been the strongest pillar in the US economic recovery, but lately the lack of wage growth has made it hard for the U.S. Federal Reserve to keep raising interest rates this year. The Fed will meet on September 19 and 20, and will publish its economic projections. The US central bank is expected to announce its balance sheet reduction timeline at the September meeting with Fed Chair Janet Yellen giving a press conference to give further details.

Gold rose 0.89 percent on Thursday. The yellow metal is trading at $1,345.49 after the European Central Bank (ECB) made no change to its rate or quantitative easing program despite improving economic conditions. The USD has not shaken off the political risks at home and abroad and with the effect of Hurricane Harvey adding to number of unemployment claims with two other storms in the horizon the precious metal has risen on dollar weakness.

Tensions involving North Korea are keeping the safe haven commodity bid as China is looking for the UN to take more actions in the matter. The lack of traction of US inflation has put question marks on the third rate hike from the Fed this year. Next week’s US inflation data and the upcoming September monetary policy meeting could stop the advance of gold, but only if there are any signs of higher inflation that could keep the hopes of a December rate hike on the table.

The EUR/USD gained 0.668 percent on Thursday. The single currency is trading at 1.1997 after the European Central Bank (ECB) punted its decision to start the QE tapering until the October monetary policy meeting. While not exactly what the market was expecting, now there is a firm date that ECB President Mario Draghi has committed the central bank to. Growth has picked up in Europe, and with it the EUR has soared yet inflation remains tame raising concerns about how much stimulus to taper and how quickly. German policy makers want as much as possible in the short term, but they are not the sole decision makers which is why the decision has taken so long and will probably be gradual.

US political turmoil has also boosted the single currency as the dollar has lost some footing as a safe haven with self induced wounds. A republican president with majority in the house and senate was never anticipated to have this much trouble passing legislation and yet Donald Trump has proven to be a unique leader.

Market events to watch this week:

Friday, September 8
4:30 am GBP Manufacturing Production m/m
8:30 am CAD Employment Change

Draghi made a half-hearted attempt to talk down the euro but the inevitability of the taper ensured his efforts failed. The euro led the way in a broad dollar rout. A handful of notable events are coming up in Asia-Pacific trading. A new USD trade has been added, bringing the number of open trades to 5; 3 in FX and 2 in indices.

Draghi confirmed the inevitable in his press conference, that the ECB will make some kind of decision in October regarding the QE programme. Leaks later showed that the staff was preparing a set of options that would give the Governing Council to buy more bonds but the market continues to push the narrative that a taper is certain. That meant a quick rally to 1.2059 before a pullback ahead of the cycle high.

As the euro climbed, the US dollar sagged -- partly due to the incredible hurricane that's headed towards Florida. The path is still uncertain but the most-likely forecast takes it straight towards the Miami area in what would be another hit to GDP. We send our thoughts to those in its path and expect the dollar to bounce if the forecast shifts.

The bond market continues to warn about trouble in the US despite a bill to extended the debt ceiling. Ten-year yields hit 2.03%, which is the worst since election night. That helped to send USD/JPY to 1.0804, which is the low since April.

USD/CAD was in the spotlight as flows took over and pushed the pair down to 1.2119, breaking the May 2015 low and setting up a test of 1.20.

The Australian dollar finished at the best levels of the day and 80 pips above the Asia-Pacific lows. It will be in focus later with July home loan numbers expected to show a 1.0% increase at 0130 GMT. That will be followed by an appearance from Debelle at 0300 GMT.

Japan is likely to get some enthusiasm-dampening news with 2Q growth expected to be revised down to 2.9% from 4.0% in the last revision. Also on the agenda is a key speech from the Fed's Dudley at 2300 GMT. He's the final core member on the schedule before next week's FOMC. George also speaks at 0015 GMT.

USD/CHF - 0.9501

Most recent candlesticks pattern : N/A

Trend                                    : Down

Tenkan-Sen level                  : 0.9528

Kijun-Sen level                    : 0.9545

Ichimoku cloud top                 : 0.9571

Ichimoku cloud bottom              : 0.9556

Original strategy :

Buy at 0.9465, Target: 0.9590, Stop: 0.9430

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9450, Target: 0.9550, Stop: 0.9415

Position : -

Target :  -

Stop : -

As the greenback has slipped again today, suggesting near term downside risk remains for weakness to 0.9470, however, if our view that low has been formed at 0.9428 last week is correct, downside would be limited to 0.9450 and bring another rebound later. Above 0.9595-00 would suggest low is possibly formed, bring test of 0.9653-55 resistance, break there would bring another rise to 0.9680 but break there is needed to add credence to this view and extend gain to resistance at 0.9698-99. 

In view of this, we are inclined to buy dollar on further subsequent decline. Below 0.9450 would risk weakness towards said support at 0.9428 but break there is needed to signal recent decline has resumed and extend further fall to 0.9390-00 first.

The British pound has resumed its upward movement in the Thursday session. In North American trade, GBP/USD is trading at 1.3094, up 0.40% on the day. On the release front, British Halifax HPI picked up speed, with a strong gain of 1.1%. This easily beat the estimate of 0.2%. In the US, unemployment claims jumped to 298 thousand, well above the estimate of 245 thousand. On Friday, the UK releases Manufacturing Production, which is expected to improve to 0.3%.

The red-hot US labor market appears to have cooled off, as recent employment indicators have been weak. On Thursday, unemployment claims jumped to 298 thousand, the highest level since April 2015. This follows weak readings in July for nonfarm payrolls and wage growth. However, the sharp rise in jobless claims can be attributed to Hurricane Harvey, which led to thousands of displaced workers in Texas filing for unemployment benefits. Unemployment numbers could remain high in upcoming weeks, until flooded areas are able to get on their feet and reconstruction projects begin, which should translate into lower jobless numbers.

One of the biggest losers in the Brexit saga will be the City of London, which stands to lose its status as the primary financial hub in Europe. There are plenty of players across the Channel casting an eye on the spoils after Britain leaves the European Union. Frankfurt and Dublin are the two main contenders, with Paris and Amsterdam are also hoping to lure large financial companies when they downsize operations in London. On Wednesday, Deutsche Bank chief executive John Cryan argued that Frankfurt is ideally suited to take over from London as the financial hub for European banks, saying it has the structures in place to take over from London. Analysts estimate that London could lose up to 30,000 jobs in the financial services sector, with clients moving up to 1.8 trillion euros in assets from the UK to the continent. Germany could gain 30% of these jobs, which would mark a huge post-Brexit boon for the country.

GBP/USD - 1.3092

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3075

Kijun-Sen level                    : 1.3075

Ichimoku cloud top              : 1.3022

Ichimoku cloud bottom        : 1.2983

Original strategy :

Buy at 1.3000, Target: 1.3120, Stop: 1.2965

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.3000, Target: 1.3120, Stop: 1.2965

Position : -

Target :  -

Stop : -

Although cable has risen again in NY morning, loss of near term upward momentum should prevent sharp move beyond 1.3140-50 and reckon 1.3175-80 would hold from here, risk from there has increased for a much needed correction to take place later today or tomorrow.

In view of this, would not chase this rise at current level and would be prudent to buy cable on subsequent pullback, below 1.3050 would bring minor correction to 1.3030-35 but reckon previous resistance at 1.2996 (now support) would limit downside and bring another rise. Only below the lower Kumo (now at 1.2983) would abort and signal top is formed instead, bring weakness to 1.2950 first. 

EUR/USD - 1.2010

Most recent candlesticks pattern   : N/A

Trend                      : Up

Tenkan-Sen level              : 1.1993

Kijun-Sen level                  : 1.1984

Ichimoku cloud top             : 1.1924

Ichimoku cloud bottom      : 1.1909

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Euro’s intra-day brief rally has dampened our bearishness and gain to resistance at 1.2070 (last week’s high) cannot be ruled out, however, break there there is needed to revive bullishness and signal recent upmove has finally resumed and extend gain to 1.2100, then towards 1.2130-40 but near term overbought condition should limit upside today.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 1.1960-65 would prolong consolidation and weakness to 1.1925-30 cannot be ruled out but break there is needed to signal an intra-day high is formed, bring weakness to 1.1900, then towards 1.1865-70 later.

USD/JPY - 108.55

Most recent candlesticks pattern   : N/A

Trend                      : Down

Tenkan-Sen level              : 108.56

Kijun-Sen level                  : 108.73

Ichimoku cloud top             : 109.14

Ichimoku cloud bottom      : 108.84

Original strategy  :

Sell at 109.55, Target: 108.55, Stop: 109.90

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 108.75, Target: 107.75, Stop: 109.10

Position :  -

Target :  -

Stop : -

As the greenback has dropped after meeting resistance at 109.40, suggesting recent decline would resume and break of previous support at 108.13, break there would extend recent downtrend to 107.75-80 and possibly towards 107.50, however, near term oversold condition would prevent sharp fall below latter level and reckon 107.20-25 would hold today, bring rebound tomorrow.

In view o this, we are still looking to sell dollar on recovery but at a lower level as 108.90-00 should cap upside. Above 109.00 would suggest an intra-day low is possibly formed but only break of said resistance at 109.40 would confirm and signal recent decline has ended instead, bring a stronger rebound to 109.70-80 first.