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In first half of the day the pair continued to move, as expected. However, a speech delivered by Governor Powell created a favourable impulse for the buck and elevated it against the Yen by 0.36% just in couple of hours. The fact that the pair did fall below the 112.40 level and made a rebound additionally confirms that it is moving in a medium-term ascending triangle. As the pair faces no barriers on its way, it is likely to surge to the upper resistance line of this pattern, which is located at the 113.21 level. Although a fourth rebound seems a more plausible scenario, there is a need to take into account an effect from a release of information about the US labour market later this day, which might lead to premature breakout.

In accordance with expectations, the yellow metal managed to restore some lost positions against the buck yesterday. However, this surge lasted only until the pair hit the 61.8% Fibonacci retracement level, which matched with beginning of Governor Powell’s speech. In result of the downfall, the pair approached the weekly S1, which is located at the 1,266.63 level. Although the first attempt to break to the bottom was not successful, eventually the pair is expected to bypass this barrier. Not only because the northern path is now secured by a combination of the 55-hour and 100-day SMAs, but also because the rate is moving in a medium-term downtrend, which should lead it to the bottom trend-line of a dominant, long-term ascending channel.

The Canadian Dollar weakened significantly against the US Dollar on account of data showing unexpectedly widened Canadian trade deficit. Following the report, the USD/CAD jumped by 62 base points or 0.49% to 1.2540, the strongest rate since August 31.

Statistics Canada revealed that the country's trade deficit widened more than anticipated to the 3.4B in the month of August, missing forecasts for a lower deficit of 2.6B. Weak report raised hopes that the Bank of Canada is unlikely to raise key interest rates one more time this year. Meanwhile, a separate report on the US trade balance revealed a 42.4B deficit versus 42.7B expected in the same period, providing additional support for the Greenback.

USDCAD is in a bullish phase in the short term after rebounding from its lowest level since May 2015. The pair broke above the 50-day moving average this week, giving a bullish signal. RSI has crossed above 50 into bullish territory. The market structure on the daily chart is still bearish, with lower highs and lower lows since the May 5 high of 1.3793. The crossover of the 50-day MA below the 200-day MA highlights the bearish picture.

The pair has reached the upper 1.25-area after rising from 1.2061 and is now finding support at the 50-day MA at 1.2463. This support level is considered to be strong since it is the 23.6% Fibonacci retracement level of the May to September downleg. Momentum signals are bullish, giving scope for further upside in the market to target the 1.27 handle, with important resistance levels at 1.2718 (38.2% Fibonacci) and 1.2777 (August 15 high). USDCAD would need to reclaim the key 1.3000 area to indicate that the broader bearish trend has ended.

Falling below the 50-day MA would increase downside pressure and turn focus back to the 1.2061 low. From this point, additional losses are expected towards the next low at 1.1919. An extension below this point would strengthen the underlying bearish bias.

The short-term bullish bias has room to run as long as USDCAD can remain above the 50-day MA and momentum signals continue to rise. Near-term risk is tilted to the upside but it cannot be said there is a reversal in the underlying downtrend.

GBPJPY has paused its decline around 147.70 but the short-term trend is bearish with increased odds for additional losses. Trend and momentum signals are negatively aligned on the 4-hour chart and adding to the bearish case.

Ichimoku cloud analysis on the 4-hour chart shows the market being below the cloud and the Tenkan-sen and Kijun-sen lines are negatively aligned. Moreover, there was a bearish crossover of the 20-period below the 50-period moving average. These bearish trend signals are pointing to more weakness in the market. Momentum indicators are bearish too but are suggesting the GBPJPY is entering a consolidation phase in the immediate term. RSI is flat and close to oversold levels at 30. MACD is lacking direction.

Should prices fall below 147.65, the next target is 146.65, a previous area of both support and resistance. A sustained move lower from this point would threaten to completely reverse the uptrend from the 141 area in September and would set sights on the key 144 handle. A further decline would bring considerable weakness in the market.

GBPJPY is trading heavily and weak trend signals suggest the short-term bearish bias will remain and a sustained move higher is not expected at this point. The market would need to reclaim the 150-handle to ease downside pressure

World stock markets hit record highs on Thursday, as optimism over tax reforms in the United States boosted risk appetite.

On Thursday, Republicans approved a fiscal spending blueprint that presented an outline for tax cuts and this instilled U.S. equity bulls with enough inspiration to send the Dow, S&P 500 and the Nasdaq to record highs for the fourth consecutive day. With investors becoming increasingly optimistic about the health of the global economy and renewed optimism over U.S. tax cuts stimulating risk sentiment, Global stocks are likely to remain supported.

Asian equities ventured higher during early trading on Friday, following the overnight gains on Wall Street. Although the risk-on mood from Asia could roll over into Europe, uncertainty surrounding the future of Catalonia has the ability to limit upside gains on European stocks.

Sterling pressured by political uncertainty

Sterling was exposed to downside risks on Thursday, as uncertainty mounted over Theresa May's future as prime minister.

The sharp depreciation of the British Pound continues to reflect the growing concerns about the Conservative Party leadership, following May's poorly received keynote speech on Wednesday.

With the unsavoury combination of Brexit risk and political uncertainty weighing heavily on sentiment, investors may start re-evaluating whether the Bank of England will raise UK rates this year.

With Sterling falling into the category of currencies that have become sensitive to monetary policy speculation, further downside is on the cards if the Bank of England fails to raise rates as anticipated in November. From a technical standpoint, the GBPUSD is bearish on the daily charts. The breakdown below 1.3150 has opened a path towards 1.3000.

Dollar higher ahead of NFP

This has been a brilliant trading week for the U.S. Dollar, as positive economic data from the States renewed optimism over Trump's tax reforms and hawkish comments from Fed officials, all supported the currency.

The Greenback is currently flexing its muscles against a basket of major currencies during Friday's trading session, as investors await the U.S. employment report this afternoon for fresh insight into the health of the U.S. job market. With the ADP data heavily distorted by the hurricanes Irma and Harvey, markets will be closely observing if the pending NFP headline figure for September follows a similar pattern. A headline figure above the 82k estimate should elevate the dollar, as expectations heighten over the Federal Reserve raising U.S. rates in December.

Much attention will also be directed towards average hourly wages, as an increase in wage growth is likely to boost optimism over inflation picking up - ultimately supporting prospects of higher rates this year.

From a technical standpoint, the Dollar Index is bullish on the daily charts. A breakout above the 94.00 resistance may encourage an incline towards 94.30 and 94.50, respectively. Bulls remain in control above the 93.00 higher low.

Commodity spotlight – Gold

Gold has received a pummelling in recent weeks on the prospects for higher U.S. interest rates, while a strengthening Dollar continues to fuel the selling pressure.

Prices are currently on track to drop for a fourth week, which will make it the worst streak of losses seen in 2017. With investors charging into the final trading quarter of 2017 - adopting a risk-on attitude, the yellow metal is looking quite dull and may be exposed to further downside.

Much attention will be directed towards the pending U.S. jobs data this afternoon, which has the ability to drag Gold below $1267 if NFP exceeds market estimates.

The yellow metal remains under pressure on the daily and weekly charts, with $1267 acting as an important support. A breakdown and daily close below is likely to trigger a further decline towards $1253. Bears remain in firm control below $1300 psychological level.

A stream of upbeat US economic data, as well as the approval of the 2018 fiscal budget in the US on Thursday, boosted the dollar to a 7-week high on Friday ahead of the widely expected nonfarm payrolls due later today. Meanwhile, the pound stretched its downtrend as concerns over May’s leadership continued to weigh on the currency.

Late on Thursday, the Republican-led US House of Representatives gave the green light to the 2018 fiscal spending to set the stage for a tax overhaul which is expected to pass easily in Senate with a simple majority, as Republicans hold 52 out of 100 seats. Although tax cuts could boost household consumption and corporate investments, Fed officials were reluctant on tax change’s future effects, with the San Francisco Fed President, John Williams, saying that gains from tax cuts could be short-lived, increasing indebtedness and feeding an “unsustainable” growth.

The dollar index flew to a 7-week high of 94.08, finding additional support from better than expected economic evidence. Next on the day, investors will eye nonfarm payrolls, which are expected to slow down given the negative impacts from Hurricanes Harvey and Irma.

Dollar/yen was 0.20% up on the day at 113.01, while labour ministry data out of Japan showed that wage growth turned positive in August.

Against its Canadian counterpart, the dollar stood at a 5-week high of 1.2593, Note that Canadian employment data are also due to be released today, following worse than expected trade data on Thursday.

The euro extended yesterday’s losses, slipping near to a 7-week low of $1.1685 against the dollar after the ECB meeting minutes revealed that the strength of the currency weighed heavily on the ECB decision to move on with the reduction of the quantitative easing program, a few months before the program expires in December. Moreover, in Catalonia divisions between leaders on the Independence issue were dragging on the markets, while the Spanish Constitutional court said on Thursday that it had suspended Catalonia’s parliament meeting scheduled on Monday.

Sterling lost 0.35% on Friday versus the dollar, falling to a one-month low of $1.3060 as markets were questioning whether the UK Prime Minister, Theresa May, has the ability to govern the country in the face of serious risks because of its decision to leave the EU, following a poor speech at the annual Conservative party on Wednesday. Recall that Brexit talks are due to enter the fifth round on Monday.

In other currencies, the aussie dropped by 0.38% to $0.7764 and the kiwi pulled back by 0.27% to $0.7094.

In energy markets, oil prices retreated on signs that another storm was heading towards the Gulf of Mexico. WTI crude declined by 0.41% to $50.58 per barrel and Brent fell by 0.32% to $56.80.

Gold was trading around $1,268.30 per ounce after approaching a two-month low of $1,266.34 on Thursday

Daily Pivots: (S1) 147.28; (P) 148.36; (R1) 149.06; More

Intraday bias in GBP/JPY remains on the downside for the moment. Current decline from 152.82 should target 55 day EMA (now at 146.27). Sustained trading below there will bring retest of 139.29 key support level. On the upside, break of 149.92 minor resistance is needed to indicate completion of the fall. Otherwise, deeper decline will now remain in favor.

In the bigger picture, medium term rebound from 122.36 is in progress. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. For now, the bullish scenario is preferred as long as 139.29 support holds.

Daily Pivots: (S1) 131.70; (P) 132.24; (R1) 132.63; More...

Intraday bias in EUR/JPY remains neutral for consolidative trading below 134.39 high. Near term outlook remains bullish as long as 131.69 holds. Sustained break of 134.20 fibonacci level will extend larger up trend to 141.04 resistance next. However, break of 131.69 will be an early sign of medium term reversal and will target 127.55 key support level instead.

In the bigger picture, current rise from 109.03 is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). 61.8% retracement of 149.76 to 109.03 at 134.20 is already met. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. On the downside, break of 127.55 support is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bullish.

The British pound has fallen to its lowest trading level against the U.S dollar since September 7th, hitting 1.3073, as speculation grows that the United Kingdom's Prime Minister Theresa May will be ousted as leader of the Conservative party.

The intraday trading sentiment surrounding the GBPUSD currency pair is now extremely bearish, with technical selling likely to accelerate while the pair remains below the 1.3140 key level.

Despite the GBPUSD pair moving into oversold territory on a number of key technical indicators, intraday selling momentum continues to accelerate.

Later today, the pair faces a key risk-event from the U.S Non-farm payrolls job report, with most analysts predicting a headline figure below 100,000 for September.

Key intraday support for the GBPUSD pair is found at its 100-day moving average, at 1.3039, and the psychological 1.3000 level. Below 1.3000, further support is found at 1.2921 and the pairs 200-day moving average, at 1.2833.

To the upside, key intraday resistance is found at 1.3100, and the former swing high, at 1.3108. Above 1.3108, the pairs key 50-day moving average, at 1.3145, acts a critical daily resistance.