Sample Category Title

EUR/USD - 1.1788

Original strategy  :

Sell at 1.1830, Target: 1.1730, Stop: 1.1865

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1830, Target: 1.1730, Stop: 1.1865

Position : -

Target :  -

Stop : -

As the single currency found support at 1.1728 after dropping sharply on Friday, suggesting consolidation above this level would be seen and recovery to the Kijun-Sen (now t 1.1809) cannot be ruled out, however, reckon previous support at 1.1830 would limit upside and bring another decline later, below 1.1750 would bring test of 1.1723-28 (previous support as well as 61.8% Fibonacci retracement of 1.1613-1.1910), break there would add credence to our view that top has been formed at 1.1910 last week, bring further fall to 1.1700 but reckon support at 1.1650 would hold. 

In view of this, we are looking to sell euro again on recovery as 1.1830 previous support should limit upside. Above the lower Kumo (now at 1.1854) would defer and risk a stronger rebound to 1.1870 but price should falter below said last week’s high at 1.1910, bring another decline later. 

USD/JPY - 110.85

Original strategy  :

Buy at 110.45, Target: 111.45, Stop: 110.10

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 110.45, Target: 111.45, Stop: 110.10

Position :  -

Target :  -

Stop : -

Friday’s rally above 110.98 resistance signals a temporary low has been formed at 109.85 last week and consolidation above this level would be seen with mild upside bias for this rebound to bring retracement of recent decline, hence gain to 111.29-30 (previous resistance and 61.8% Fibonacci retracement of 112.20-109.85) is likely, however, break there is needed to add credence to this view, bring retracement of recent decline to 111.50 but price should falter below another previous resistance at 111.71.

In view of this, we are looking to buy dollar on dips as 110.40-50 should limit downside and bring another rise later. Below 110.15-20 would defer but only break of 110.00 would signal the rebound from 109.85 has ended, bring retest of this level, below there would extend recent decline to 109.70 and later towards 109.50.

The Canadian dollar has started the week with slight losses, as USD/CAD is trading at 1.2680, up 0.25% on the day. Canadian banks are closed for a holiday and there are no major US events on the schedule, so traders can expect an uneventful day from the pair. On Tuesday, the US releases JOLTS Jobs Openings., which is expected to edge lower to 5.66 million.

The markets were glued to employment numbers on both sides of the border on Friday, and the US releases were considerably stronger than the Canadian numbers. The Canadian dollar had recorded five consecutive weekly gains, but that streak ended, as the loonie slipped 1.7% last week. US Nonfarm Payrolls came in at 209 thousand, easily beating the estimate of 182 thousand. The unemployment rate edged lower to 4.3%, but wage growth remains soft, and was unchanged at 0.3%. On the Canadian side, the economy added 10.9 thousand jobs in July, but this missed the estimate of 13.1 thousand, and was well below the June reading of 45.3 thousand. There was some positive news, however, as Canada's unemployment rate dropped from 6.5% to 6.3%, its lowest level since 2008.

The strong US payrolls report has boosted the odds of a December rate hike, which are currently at 47%, up from 43% one week ago. With the Federal Reserve unlikely to raise rates before December, investor attention has shifted to the Fed's balance sheet, which stands at $4.2 trillion. Fed policymakers have broadly hinted at reducing purchases of bonds and securities starting in September, but San Francisco Fed President John Williams was more forthcoming about the Fed's plans, likely aimed at giving notice to the markets. In a speech on Wednesday, Williams said that the economy had "fully recovered" from the 2008 financial crisis and called on the Fed to start trimming the balance sheet "this fall". Williams added that the process would be gradual and would take four years to reduce the balance sheet to a "reasonable size". Other FOMC members have also come out in favor of the Fed starting to wind up its portfolio this fall.

• Futures buoyed by jobs data;
• Fed speakers have their say as wage growth continues to drag;
• Oil lower ahead of producers meeting in Abu Dhabi.

US futures are pointing a little higher on Monday, with the spill over from the July jobs report perhaps providing a small boost to sentiment at the start of the week.

The jobs report was quite well received on Friday despite suffering the same pitfall that has plagued the US recovery for years, inadequate wage growth. With this still lacking, the inflation numbers are unlikely to dramatically improve and the number of those within the Federal Reserve that are uncomfortable with the pace of tightening could grow. Investors are already unconvinced that we'll see another rate hike this year and unless something changes on wages and inflation, I don't see that changing any time soon.

Two of the more dovish members of the Fed that have already voiced concerns about this will be appearing on Monday. Neel Kashkari and James Bullard are both scheduled to speak today and I would be surprised if their concerns will have been eased by Friday's numbers. That said, with only Kashkari being a voting member on the FOMC and a known dove, there may be little to take away from the comments, unless of course he either strikes and unlikely hawkish tone or suggests others are coming around to his way of thinking.

Oil is more than 1% lower so far today as oil producers taking part in the output cut meet in Abu Dhabi to discuss compliance issues that could threaten the deal. Compliance until now has actually been very strong, much stronger in fact than many anticipated, but the longer the cuts last, the more challenging it is likely to become, especially if oil prices don't recover to the levels that officials expected.

Still, while oil is down on the day, it's still trading near a two-month high and has actually stabilised around $50 a barrel in WTI and $52.50 in Brent for more than a week. I don't think we can read too much into these small intra-day moves but should compliance become a bigger issue, then prices could plummet once again.

This week is looking a little quieter on the economic data side, with most of the notable releases coming later on, including all-important US inflation figures for July. The labor market conditions index and consumer credit numbers for the US are the only pieces of data still to come today.

Brent is trading in the red after another failure to breakout above the 53.03 major static resistance. Is consolidating the latest gains, but he could decrease again in the upcoming days and could reach and retest the sliding line (SL) and the downside line of the minor ascending channel.

Price is trading in the green and looks motivated to take out the near term resistance levels. Has managed to jump above the median line (ml) of the minor descending pitchfork and now is pressuring the 1.2678 static support. A valid breakout above these levels will confirm a further increase in the upcoming days.

The next upside targets will be at the warning line (wl3) and higher at the median line (ML) of te major descending pitchfork. Could also be attracted by the upper median line (uml) of the minor descending pitchfork.

USD/JPY posted little gains today as the USDX and Nikkei have changed little as well. Price increased and is struggling to resume the Friday's bullish candle. Is located above the 110.80 level and is approaching the 111.04 Friday's high.

The Yen decreased as the Nikkei stock index is trading higher, the index retested the 20058 major static resistance today. JP225 continues to move sideways, is narrowing on the Daily chart, but I hope that we'll have a clear and significant move very soon.

Nikkei has developed a minor symmetrical triangle, but remains to see the breakout direction because a drop towards the 19700 level will force the Yen to dominate the currency market again. The Japanese Leading Indicators indicator was reported at 106.3%, higher versus the 106.02%, but less versus the 104.6% in the former reading period.

Price increased and could reach and retest the 38.2% retracement level in the upcoming days if the USDX and the Nikkei stock index will increase. Continues to move in range between the 23.6% and the 50% retracement level, is trapped within a symmetrical triangle, so we'll have a clear direction only after a valid breakout from the chart pattern.

USD/JPY failed to reach and retest the downside line of the symmetrical triangle, signaling that the bulls are sill in the game. A large rebound will be confirmed after a breakout above the WL3, while a broader drop under the warning line (wl1) of the minor ascending pitchfork.

USDCAD is also seen in final stages of a corrective retracement, currently in subwave v of c), trading at 1.2660 resistance. A turn down from here in five waves back to 1.2510 will confirm a bearish turn for the pair. In fact, oil is also seen in a corrective set-back, so when uptrend will continue that’s when CAD may find buyers.

USDCAD, 1H

A resurgent dollar post-Fridays not so bad data, weighs on oil and gold, even if only temporarily.

Friday's better than expected Non-Farm Payrolls, at 209,000 jobs added, wasn't a bad number, but it wasn't a king hit one other. The rally in the U.S dollar may well be just as much to do with short term positioning as it was with the data. We also note, that the hourly earnings were almost flat at 2.50% year on year and the participation rate remains anchored around 63.0%. Hardly earth shaking enough for the Federal Reserve to pull the inflation gun down of the wall and pull the trigger for a September hike.

Nonetheless, U.S. treasury yields moved higher and so did the dollar. It maintains my base case that it is the trajectory of U.S. rates that is the real story of 2017. In the short term though, there is no doubt that a stronger dollar is weighing on gold in particular and to a lesser extent oil even if it is only near term pain for bulls.

OPEC/Non-OPEC's technical committee is meeting quietly today and tomorrow in Abu Dhabi, and headlines from this may see some volatility in oil prices with compliance top of their agenda as well as bringing Nigeria and Libya “into the fold.”Traders appear to be content to await the API and EIA Crude Inventory numbers, tomorrow and Wednesday evening Asia time, for a sense of direction in what is generally, a very data light week for financial markets.

Brent

Brent spot opened unchanged at 52.15 with its triple top at 52.70 unchallenged thus far, and the must break level before we can talk about a new leg higher. Brent has drifted lower by around one percent in Asia, still some way away from the support that continues to be in the 50.45/65 zone. The zone contains its 50% Fibonacci retracement and the 100-day moving average.

WTI

WTI spot opened unchanged at 49.40 in Asia and had drifted one percent lower to 48.80 over the session. With its double top resistance at 50.30 also unchallenged, support continues to be at 48.20, last week's low, and the 100-day moving average at 47.80.

Gold

The strong non-farm payrolls data on Friday saw the U.S. dollar strengthen in general and this weighed on gold as the week drew to a close, falling 10 dollars to the 1258.50 area. Whether the dollar strength is temporary or more permanent has yet to be seen, and in a data light week unlikely to be answered anytime soon.

As a result, gold will be somewhat at the mercy of geopolitical headlines in the coming days and may also suffer if the recent dollar weakness continues to correct.

The price action on Friday left gold looking less than spectacular as we started the week's trading in Asia unchanged at 1258.50. It has drifted two dollars lower across the session to 1256.20, hovering above two keys supports. The 100-day average at 1252.85 and it's 50% Fibonacci retracement at 1249.25, the latter being a pivot level for price action of late.

Last week's resistance levels at 1274.20 and 1282.10 are now somewhat distant and unlikely to be challenged in the first half of the week at least.

EUR/USD has ticked higher in the Monday session. Currently, the pair is trading at the 1.18 line, up 0.24% on the day. On the release front, German Industrial Orders disappointed with a decline of 1.1%, compared to the estimate of +0.2%. The Eurozone Sentix Investor Confidence slowed to 27.7, just shy of the forecast of 27.8 points. There are no major US releases on the schedule. On Tuesday, the US releases JOLTS Jobs Openings., which is expected to edge lower to 5.66 million.

The euro climbed above the 1.19 line on Thursday, its highest level since January 2015. However, the currency lost 1.2% on Friday, as a strong US nonfarm payrolls report boosted the US dollar. The markets had forecast a sharp slowdown of 182 thousand, but the reading of 209 thousand easily beat the estimate. The unemployment rate edged lower to 4.3%, but wage growth remains soft, and was unchanged at 0.3%.

The markets have grown accustomed to strong German numbers, so July's Industrial Production was a nasty surprise, posting a sharp decline of 1.1%. This marked the weakest reading this year. Still, German indicators continue to point to an expanding German economy. Retail Sales jumped 1.1%, its second-highest gain in 2017. Factory Orders gained 1.0%, while unemployment claims dropped 9 thousand – the employment indicator has declined every month in 2017, except one. Although manufacturing and services PMIs dipped in July, both are well over the 50-level, indicative of expansion. Are the strong German numbers too much of a good thing? Some analysts think so, and are cautioning that the German economy is in danger of overheating. The eurozone economy has also benefited from the robust German economy. Eurozone GDP gained 0.6% in the second quarter, up from 0.5% in the previous quarter. As well, Eurozone Retail Sales gained 0.5%, marking a 4-month high.