Sample Category Title

EUR/USD - 1.1393

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1411

Kijun-Sen level                  : 1.1410

Ichimoku cloud top             : 1.1355

Ichimoku cloud bottom      : 1.1350

Original strategy  :

Buy at 1.1355, Target: 1.1455, Stop: 1.1320

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1335, Target: 1.1440, Stop: 1.1300

Position : -

Target :  -

Stop : -

As the single currency has retreated after faltering below resistance at 1.1446, suggesting consolidation below this level would be seen and pullback to 1.1355-60 cannot be ruled out, however, reckon support at 1.1312 would limit downside and bring another rise later, above said last week’s high at 1.1446 would confirm recent upmove has resumed for headway to 1.1475-80 but price should falter below 1.1500.

In view of this, we are looking to buy euro on dips but one should exit on subsequent rally. Below said support at 1.1312 would abort and signal top has been formed at 1.1446, bring retracement of recent rise to 1.1292 (previous support as well as 50% Fibonacci retracement of 1.1139-1.1446), then towards 1.1270.

Daily Pivots: (S1) 112.85; (P) 113.14; (R1) 113.57; More...

Intraday bias in USD/JPY remains on the upside for 114.36 resistance. Decisive break there will confirm our bullish view that corrective pull back from 118.65 has completed at 108.12. In that case, further rally would be seen to retest 118.65. On the downside, break of 112.88 support is needed to indicate short term topping. Otherwise, outlook will remain bullish in case of retreat.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85.

USD/JPY - 113.83

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback has risen again and broke above resistance at 113.69 and initial upside risk remains for recent upmove to extend gain to 114.00, loss of momentum should prevent sharp move beyond 114.25-30 and reckon 114.50-55 would hold from here, risk from there has increased for a retreat to take place later.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below the Kijun-Sen (now at 113.49) would bring pullback to 113.10-15 but only break of support at 112.74-88 would signal top is formed, bring correction of recent rise to 112.60, then 112.40.

Daily Pivots: (S1) 0.9583; (P) 0.9622; (R1) 0.9643; More......

Intraday bias in USD/CHF is turned neutral again with current recovery. Consolidation from 0.9551 might extend but upside should be limited by 0.9770 resistance to bring fall resumption. Break of 0.9551 will extend the decline from 1.0342 to 0.94443 key support level. At this point, we'd expect strong support from there to bring rebound.

In the bigger picture, USD/CHF is still bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level. However, sustained break of 0.9443 will carry larger bearish implication and target 0.9 handle.

Daily Pivots: (S1) 1.2930; (P) 1.2957; (R1) 1.2995; More...

GBP/USD's correction from 1.3029 extends lower today but outlook is unchanged. We'd expect downside to be contained by 1.2849 support to bring rise resumption. Above 1.2982 minor resistance should turn bias back to the upside for 1.3047 resistance. Break will target 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168 next. However, sustained break of 1.2849 will dampen our near term bullish view and turn focus back to 1.2588 support.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is now in favor, overall outlook remains bearish as long as 1.3444 key resistance holds. Larger down trend from 1.7190 is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

June saw the Canadian economy add 45.3k net jobs. More Canadians joined the labour market, but the strong job gains were enough to offset this impact, leading the unemployment rate a tick lower, to 6.5%.

Job gains were concentrated in part-time positions, up 37.1k, while full time work added 8.1k net jobs. The employee/self-employed mix was nearly half-and-half, as 23.9k net employment positions were added, versus a 21.4k gain in self-employment.

The private sector led the gains in employees for a second month in June, adding 17.8k, while the public sector created a net 6k positions.

June saw fairly wide-spread gains in employment across the major sectors. On the goods-producing side of things, 16k positions were added, led by agriculture (+12k), with more modest gains reported across most of the other categories. Among the service-producing industries (+29.2k), professional services led the way (+27k), offset somewhat by declines in business support services (-15.1k) and transportation (-7.4). Modest job gains were seen in most of the other major service sectors.

Looking across the country, Quebec and B.C. led the charge, adding 28.3k and 19.7k respectively. Among the remaining provinces, it was a mixed bag of generally flat performances, excluding Alberta, which added 7.5k net jobs in June.

Aggregate hours worked ticked up somewhat in June, up 1.4% year-on-year. Continuing the trend that has emerged this year, hourly wage growth remained soft, rising just 1.0% year-on-year.

Key Implications

The Canadian economy again defied expectations, turning in another month of solid job gains. While the employment mix was heavy on part-time job gains, another tick higher in the participation rate, and a decent expansion of hours worked were both encouraging to see.

If there is a fly in the ointment, it is again the stubborn lack of wage pressures despite solid job gains (+186k year-to-date, driven entirely by full-time work) and a robust economic backdrop.

Further, hiding beneath the solid figures are regional divergences, with soft employment figures (including wages) in Ontario adding the list of concerns, particularly given recent moves in housing markets and the province's reliance on real estate as a driver of growth.

Today's jobs figures are the last major piece of economic data before the Bank of Canada's interest rate decision on Wednesday (June 12th). However, this report is unlikely to carry much weight on their decision, given it continues the trend of robust job gains, and the weak wage backdrop was present ahead of the change in communication strategy last month.

Indeed, a sharp hawkish swing in the tone of communication in June, further reinforced this week, suggests that despite a lack of inflationary pressures (let alone a 'bottoming out' of inflation), the Bank's policy interest rate is going up, and the market has already braced for this by pricing in a hike for next week.

Hiring picked up the pace in June, as non-farm payrolls increased by a healthy 222k, up from an upwardly revised 152K in May. On top of the solid headline gain, revisions to the previous two months' of payrolls added 47k positions.

Private payrolls rose by 187k, led by broad based gains across the services sector (+162k). Hiring continues to be strong in health care & education (+45k), leisure & hospitality (+36k), and business services (+35K). Goods hiring picked up (+25k), on gains in construction (+16k) and mining & logging (+8k). That marks eight straight months of job growth for the mining sector off its October 2016 low. Manufacturing continues to be relatively flat (+1k).

Government hiring also picked up (+35k), driven by gains at the state and local level. Federal hiring was more modest (+4k).

The unemployment rate ticked up slightly to 4.4% as 361k workers entered the labor force, reversing much of May's exodus. The labor participation rate rose 0.1 percentage points to 62.8% - in line with its average over the past 12 months. The growth in the labor force reversed May's improvement is broader underemployment measures, with the broadest measure (U-6) up 0.2pp to 8.6%.

One soft spot in the report was a middling 0.2% gain in average hourly earnings. Year-on-year, wages were up 2.5% in June, an slight improvement from 2.4% in May. Offsetting that disappointment somewhat was an uptick in hours worked to 34.5 in June.

Key Implications

Well, so much for job gains moderating. A strong June and upward revision to prior months has seen hiring average 180k jobs per month so far in 2017, roughly in line with 2016's 187k average. The slight uptick in the unemployment rate is not overly surprising given the large drop in the labor force in May, and the unemployment rate is still below what the Fed would consider the "neutral" rate.

We continue to expect monthly job gains to moderate in the coming months, as tight labor markets make new hires tougher to find (see our recent quarterly forecast). But, as long as monthly hiring remains above the 80-120k level required to absorb new entrants to the labor force, labor market slack will continue to diminish.

As far as its full-employment mandate is concerned, the Fed is well justified in gradually removing monetary stimulus. It is the recent softness in inflation that has caused some consternation by FOMC members (see FOMC minutes). The move up in year-on-year wage growth in June is encouraging, although the relationship between labor market tightness and inflation does seem weaker than in the past. We expect the Fed to next focus on shrinking its balance sheet, likely in the fall, before taking rates another quarter point higher at the end of the year.

Non-farm payroll (NFP):

The most important number to track on the jobs report this morning is not the top number, or the unemployment rate, it's wages and it has disappointed again.

• U.S Employers add +222k Jobs in June
• Jun Unemployment Rate 4.4%; Consensus 4.3%
• Jun Average Hourly Earnings +0.15%, or +$0.04 to $26.25; Over Year +2.5%
• May Unemployment Unrevised at 4.3%
• May Payrolls Revised to +152K; Apr Revised to +207K
• Jun Labor-Force Participation Rate 62.8%
• Private Sector Payrolls +187K and Government Payrolls +35K
• Jun Average Workweek +0.1 Hour to 34.5 Hours

The revisions showed job growth was better in April and May than previously thought. The U.S economy has created an average of +194k jobs over the past three months.

USD has pared some of its overnight gains (€1.1419, £1.2907, ¥113.76).

Selling pressure in the bond market is stalling as the payrolls release shows once again that bond investors place more importance on the wage inflation reading than the jobs growth figure.

The market is pricing in +62% chance on the Fed lifting rates one more time before the end of the year.

The yield on the U.S 10-year Treasury note has fallen -3 bops to +2.365%

Canada jobs report:

• Job Creation Keeps Chugging Along in Canada
• Canada Adds 45,300 jobs in June
• Unemployment rate falls to +6.5%
• Jun Avg. hourly wages +1.3% y/y
• Jun Full-Time Jobs +8,100; Part-Time +37,100
• Canada Jun Participation Rate At 65.9% Vs 65.8% In May
• C$1.2903 +0.65%

Today's numbers eliminate the last possible obstacle for the Bank of Canada should it choose to raise its policy rate next week (July 12) as widely expected.

Daily Pivots: (S1) 1.1359; (P) 1.1392 (R1) 1.1454; More.....

Intraday bias in EUR/USD remains neutral for the moment with focus on 1.1444 resistance. Break there will resume whole rise from 1.0339 low and target 1.1615 resistance next. In case consolidation from 1.1444 extends with another fall, downside should be contained by 1.1291 resistance turned support to bring rally resumption. Meanwhile, break of 1.1291 will turn focus back to 1.1118 support instead.

In the bigger picture, the firm break of 1.1298 resistance further affirm medium term reversal. That is an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Further rise would be seen to 55 month EMA (now at 1.1776). Sustained break there will pave the way to 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 next. This will now remain the favored case as long as 1.1118 support holds.

Dollar is quite unfancied by the stronger than expected headline non-farm payroll number. NFP showed 222k growth in June versus expectation of 173k. Prior month's figure was also revised up from 138k to 152k. However, unemployment rate rose 0.1% to 4.4%. And more importantly, average hourly earnings rose 0.2% mom versus expectation of 0.3% mom. Prior months wage growth was also revised down from 0.2% mom to 0.1% mom. EUR/USD spikes lower to 1.1388 but is quickly back at 1.1420. Nonetheless, USD/JPY is firm at around 113.70, but as supported by Yen's weakness.

On the other hand, Canadian Dollar is gaining some momentum after its own job data. The employment market in Canada rose 45.3k in June, above expectation of 11.4k, not far from prior month's 54.5k. Unemployment rate also dropped 0.1% to 6.5%. The job data is supportive to a rate hike by BoC next week.

UK data disappointed again

Meanwhile, Sterling tumbles sharply as production data from UK released today completed a string of weaker than expected data that raised doubts on the strength of the economy. Industrial production dropped -0.1% mom, -0.2% yoy in May versus expectation of 0.4% mom, 0.2% yoy. Manufacturing production dropped -0.2% mom, rose 0.4% yoy versus expectation of 0.4% mom, 0.9% yoy.

Construction output dropped -1.2% mom in May versus expectation of 0.6% rise. Trade deficit also widened to GBP -11.9b in May versus expectation of GBP -10.9B. BoE Governor Mark Carney said before that the committee will discuss on raising rate in the coming months. But if the outlook worsen, it's believed the central bank will stay cautious, until at least when the picture for Brexit becomes clearer.

Also released from Europe today, German industrial production rose 1.2% mom in May versus expectation of 0.2% mom. Swiss unemployment rate rose 3.2% was unchanged at 3.2% in June. Swiss foreign currency reserves was relatively unchanged at CHF 639.5b in June.

BoJ announced emergency bond operation

In response to the this week's surge in global bond yields, BoJ announced to carry out an emergency fixed-rate bond buying operation to curb long term yields under the so called "Yield Curve Control" framework. The central bank said it will buy unlimited amount of JGB with maturities of 5 to 10 years. This is the third time BoJ carries out such operations since the announcement of YCC last year. The first offer in November drew no bids. Under the second operation in February, JPY 723.9b in bonds were purchased.

Released from Japan, labor cash earnings rose 0.7% yoy in May, while real cash earnings rose 0.1% yoy. Leading index rose to 104.7 in May.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1359; (P) 1.1392 (R1) 1.1454; More.....

Intraday bias in EUR/USD remains neutral for the moment with focus on 1.1444 resistance. Break there will resume whole rise from 1.0339 low and target 1.1615 resistance next. In case consolidation from 1.1444 extends with another fall, downside should be contained by 1.1291 resistance turned support to bring rally resumption. Meanwhile, break of 1.1291 will turn focus back to 1.1118 support instead.

In the bigger picture, the firm break of 1.1298 resistance further affirm medium term reversal. That is an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Further rise would be seen to 55 month EMA (now at 1.1776). Sustained break there will pave the way to 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 next. This will now remain the favored case as long as 1.1118 support holds.

Economic Indicators Update