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NFP Headlines Big Data Week

It promises to be another very busy week in the markets, with particular focus falling on the economic data, the most notable will come on Friday in the form of the US jobs report.

We'll also get a few notable releases on Monday, with the official and ISM manufacturing PMIs being released alongside construction spending figures. Federal Reserve policy maker and FOMC voter Robert Kaplan is also scheduled to appear today and is one of a number of officials due to speak this week.

Chaos as Catalans Vote For Independence

The illegal Catalonia independence referendum went broadly as expected over the weekend as voters turned out and clashed with Spanish police, who had been tasked with stopping the vote taking place. While hundreds of people were injured in the clashes, a large number of people managed to cast their vote and it's claimed that 90% of those that did voted for independence.

While the vote isn't legally binding, traders are clearly a little concerned about the impact that the vote, not to mention how the situation was handled by the Spanish authorities. The IBEX is the worst performing major index in Europe on Monday, down more than 1%, while the euro is also suffering in the aftermath of the vote, down more than half a percent against the dollar.

Sterling Slips After PMI as Conservative Party Conference Gets Underway

There's been a flurry of economic data releases already today, with manufacturing PMIs being released for countries throughout Europe. The data was broadly in line with expectations, with the Italian reading missing slightly and the Spanish coming in a little above. The UK manufacturing PMI slipped a little more than expected, dropping from 56.7 to 55.9, further weighing on the pound this morning.

Sterling is coming under a little pressure as the Conservative party conference gets underway in Manchester. Concerns about division within the party on both the Brexit strategy and Theresa May's position as leader continue to paint the picture of instability within the Conservatives, following what was a disastrous election campaign that saw them unnecessarily concede their majority. We're likely to hear plenty of murmurings over the coming days and there'll be particular focus on speeches from May and Boris Johnson who has repeatedly undermined her on Brexit and is clearly vying for her position.

The euro has lost ground in the Monday session. Currently, EUR/USD is trading at 1.1734, down 0.69% on the day. On the release front, German Final Manufacturing PMI improved to 60.6, matching the forecast. In the Eurozone, Final Manufacturing PMI improved to 58.1, just shy of the estimate of 58.2 points. In the US, the focus is also on manufacturing data, led by ISM Manufacturing PMI, which is expected to slow to 57.9 points.

The weekend referendum in Catalonia, one of the richest regions in Spain, descended into street battles and widespread violence between voters and police. The national government banned the referendum, and police used tear gas and rubber bullets in against defiant voters, causing hundreds of casualties. Catalonian officials claimed that 90 percent of voters had voted for independence, setting up a constitutional crisis with Madrid. Although, the drama in Spain is not expected to have a serious impact on the eurozone nervous investors reacted to the news on Monday by selling their euros in favor of the dollar and Swiss franc.

The eurozone economy continues to hum in 2017, and the manufacturing sector has rebounded, thanks to a stronger global economy which continues to show strong demand for European products. German and Eurozone Final Manufacturing PMIs both improved in September, with the German indicator recording its strongest reading since April 2011. The labor market also has been improving. The eurozone unemployment rate remained at 9.1%, just below the estimate of 9.0%. Better economic conditions have led to louder calls for the ECB to tighten its monetary policy, particularly from Germany, where officials feel that that the robust economy needs tighter policy. However, the ECB must take into account those member countries that are lagging behind Germany, and ECB President Mario Draghi reiterated last week that the ECB had not made any plans to taper its asset purchase program.

The US dollar gained some ground last week from an unexpected source – President Donald Trump. Trump has all but given up on his health care proposal, as the plan lacks enough support from Republican lawmakers. Next on the Trump Express is tax reform, which was a key campaign plank. Last week, Trump proposed a major overhaul of the US tax code, which includes reducing the corporate tax rate from 35 percent to 20 percent, as well as a 25 percent tax rate for small businesses, such as partnerships. Like other Trump proposals, the tax plan was sketchy on details, including how the tax plan would be paid for. With Democrats and some Republicans wary of Trump’s tax agenda, it’s likely his that tax reform proposal will face a stiff battle in Congress. Still, the markets like the idea of lower taxes, and the US dollar posted back-to-back weekly gains.

Brent Oil extends pullback from last week and remains in steep descend for the fifth straight day. Fresh bearish extension on Monday cracked important support at $56.00 (Fibo 38.2% of $50.47/$59.48 upleg).

Rising 20SMA (currently at $55.72) is reinforcing support zone, where bears may take a breather on oversold slow stochastic.

However, south-heading daily RSI shows a plenty of room at the downside and signals further easing on firm break below $56.00/$55.72 triggers, which would expose support at $54.97 (daily Kijun-sen / 50% retracement.

Initial resistance lies at $56.74 (session high) and extended upticks should remain below broken daily Tenkan-sen at $57.36.

Res: 56.74, 57.00, 57.36, 57.72
Sup: 55.98, 55.72, 55.25, 54.97

Crude oil is consolidating above the $50 level. Key support is given at 45.40 (17/08/2017 high). Strong resistance found at 52.43 (26/09/2017) has been broken. Expected to show another leg higher.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).

Silver has reversed and has broken uptrend channel by breaking support implied by its lower bound. Strong resistance is given at 18.65 (17/04/2017 high) while support found at 16.58 (15/08/2017 high) has been broken. Expected to show further bearish move.

In the long-term, the trend is rater negative. Further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Gold continues to go down. Hourly support is given at 1267 (15/08/2017 low). Hourly resistance is located at 1357 (08/09/2016). Stronger support lies at 1204 (10/07/2017 high). Expected to show further bearish move.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

Bitcoin has strongly increased over the weekend. Strong support is given at 2975 (22/08/2017 low). Sell walls around $4000 have been broken. Key resistance can be located at 4921 (01/09/2017 high). The road is wide open for further increase.

In the long-term, the digital currency has had an exponential growth. There are decent likelihood that the asset will reach $10'000.

EUR/CHF is breaking within uptrend channel. Yet, we need more downside pressures. Strong resistance is now given at 1.1623 (22/09/2017 high). Expected to show further short-term weakness.

In the longer term, the technical structure has reversed. Strong resistance is given at 1.20 (level before the unpeg). Yet, the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

EUR/GBP is trading sideways. Yet, the pair is facing selling pressures. As long as prices remain below the resistance at 0.8899 (19/09/2017 low), the short-term technical structure is biased to the downside. Hourly support is given at 0.8746 (27/09/2017). Resistance lies at 0.8899 (19/09/2017 high).

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 (psychological level).

AUD/USD has weakened over the past weeks. Hourly resistance is given at 0.7883 (27/05/2017 high). The pair is approaching support at 0.7786 (18/07/2017 low). Expected to show continued consolidation.

In the long-term, the trend is turning positive. Key supports stands at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8164 (14/05/2015 high) is needed to invalidate our long-term bearish view.