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'As the labor market continues to tighten that will nudge wages up, which will in turn bolster inflation.' -Mark Zandi, Moody's Analytics

The US private sector created less than expected jobs last month, suggesting that job creation started to cool after strong gains registered earlier. The ADP National Employment Report released on Thursday showed companies added 158K new jobs to the economy in June, following the preceding month's downwardly revised figure of 230K and surpassing analysts' expectations for an 185K increase. The second-weakest report within this year indicated that businesses decided to put off expansion projects until the Trump administration's plans are realised. Moreover, experts suggested that companies would continue to face difficulties of finding skilled workers as the labour market is expected to tighten further. The report is closely followed by the Federal Reserve, which remained cautious about job creation and its impact on wage growth. Notwithstanding weak inflationary pressures, the Federal Reserve is likely to raise interest rates at least one more time in 2017 as promised. The ADP figures came out ahead of the NFP report, which is expected to show a gain of 175K new jobs, following May's increase of 138K.

'How Canada's trade picture is tracking into the second quarter will put yet more wind into the Bank of Canada's sails.' -Derek Holt, Scotiabank Economics.

Canada's trade deficit widened almost two times fueled by gains in aircraft imports. Statistics Canada reported that the country's trade gap came in at C$1.1B in May, up from the preceding month's downwardly revised deficit of C$0.6B. However, the reading missed market projections for a C$0.5B trade deficit for the month. The trade balance report showed that the total value of exports posted a 1.3% monthly increase to C$48.7, while imports rose 1.3% to C$49.8 in May. On a yearly basis, exports rose 10.2% amid higher demand for unwrought gold from the United Kingdom. Meanwhile, total exports jumped 17.8% for the year due to more shipments of aircrafts, motor vehicles and parts. Imports from the United States grew to a record high of C$32.7B, while shipments to the southern neighbour fell 0.3% to C$36.3B. The weak data is expected to disappoint the Bank of Canada and postpone monetary policy tightening. However, businesses expressed optimism over the outlook for Canadian trade, while surging demand is set to lead to higher investment and hiring.

Today, all eyes will be on the US employment report for June. The forecast is for nonfarm payrolls to have risen by 179k, more than the 138k in May. The unemployment rate is expected to have remained unchanged at 4.3%, while average hourly earnings are expected to have accelerated in monthly terms.

Overall, this would be another employment report consistent with further tightening in the labor market, which will be pleasant news for FOMC policymakers. Despite agreeing on raising the Federal funds rate in June, they were split on the outlook for inflation, how it might affect the future pace of interest rates, and when they should start normalizing the Bank's enormous balance sheet, according to the minutes of the latest gathering. Market expectations remained unaffected after the minutes' lack of clarity with regards to the timing of the next rate increase.

Therefore, if the June jobs report is indeed as robust as expected, it could bring forth those expectations and thereby, support the dollar. Having said that though, we would stay mindful as to whether the outcome will have lasting effects as a few hours later, the Federal Reserve will release its semi-annual monetary policy report to Congress, which could also impact market pricing with regards to the next increase in borrowing costs. After the minutes from the latest Fed gathering failed to provide extra hints with regards the future path of monetary policy, investors may dig into this report looking for such hints.

XAU/USD has been trading in a short-term downtrend since the 6th of June. On the 3rd of July, the precious metal dipped below the longer-term upside support line taken from the low of the 27th of January, something that trigger steeper declines. Nevertheless, the metal's tumble was halted once again by the 1217 (S1) zone, where we believe it settled waiting for the NFPs today. If the US jobs report comes in encouraging, the bears may take in charge again and perhaps drive the battle below the 1217 (S1) line, initially aiming for 1210 (S2). Another break below 1210 (S2) is possible to open the way for the psychological zone of 1200 (S3).

BoJ bond buying brings the yen under selling interest

Overnight, the Bank of Japan stepped in to the bond market, in order to put a lid on JGB yields after the 10 yr. yield had risen to 0.105%. The Bank bought 500bn yen of 5 to 10 JGBs, more than the 450bn in its prior operation. This is a move consistent with its yield-curve control policy, according to which the Bank aims at keeping the 10yr. yield at around 0%. The result as far as the FX market is concerned was a weakening yen.

USD/JPY spiked up during the Asian morning, breaking above the resistance now turned into support of 113.45 (S1) and clearing the longer-term downside resistance line drawn from the peak of the 11th of January. In our view, the overnight rally signals the continuation of the short-term uptrend that has been in place since the 15th of June. A decisive break above the resistance level of 113.90 (R1) is possible to open the way for our next obstacle of 114.40 (R2), marked by the peak of the 10th of May.

As for the rest of today's events:

Global leaders gather In Hamburg, Germany, for the 12th G20 summit. The leaders of the world's top economies will discuss terror attacks, free trade, and climate change.

As for the economic indicators, in the UK we have industrial production data for May. Expectation are for the IP to have accelerated, something that could prove positive for the pound.

At the same time we get the US employment report, we have jobs data from Canada as well. The forecast is for the unemployment rate to have held steady and for the net change in employment to have remained in positive territory. These data will be closely tracked amid recent signals from BoC policymakers that a tightening move may be on the cards soon. Another month of solid employment gains could add fuel to such speculation.

As for the speakers, BoE Governor Mark Carney speaks. Following his hawkish remarks last week, it will be interesting to see whether he continues to share the same view.

XAU/USD

Support: 1217 (S1), 1210 (S2), 1200 (S3)

Resistance: 1230 (R1), 1240 (R2), 1248 (R3)

USD/JPY

Support: 113.45 (S1), 112.90 (S2), 112.50 (S3)

Resistance: 113.90 (R1), 114.40 (R2), 114.90 (R3)

GBPJPY has been in an uptrend since rising from the June 12 low of 138.65. The pair hit a high of 147.60, nearing a one-month high. The May 10 high of 148.09 is in sight as the next target.

The RSI is approaching overbought levels on the 4-hour chart which suggests that GBPJPY may consolidate or pullback in the near term.

The 20-period moving average, currently located at 146.53, could act as a potential support level for any downside moves. Below this, important support comes into view at 146.00. This level has been tested several times in the past week and is considered to be a strong support mark. If it fails to hold, prices could fall towards another key level at 145.00. A drop from here opens the way towards support at 144.20 (June 27 high) and 143.25 (June 28 low). A deeper decline would change the current uptrend and the bias would turn bearish.

Alternatively, if GBPJPY regains upside momentum, a break of 147.60 could accelerate a move higher and strengthen the uptrend with scope to reach the May 10 high of 148.09 and from here the 150 handle would be targeted. The short-term outlook remains bullish as long as the market is trading above the moving averages.

During the Asian trading session, the yen fell against the dollar amid the latest Bank of Japan bond intervention. This helped the greenback reverse its losses against the yen following yesterday's disappointing set of data out of the US. The focus of the day will be on the key jobs report to be released later in the day by the US Labor Department.

The yen weakened against its major counterparts after the BoJ announced it was ready to purchase an unlimited amount of Japanese government bonds in a move aimed at capping a rise in yields. Dollar/yen rose to half a percent to its highest level since mid-May during the Asian trading session. The pair was last trading at 113.71. Euro/yen rose to its highest level in 17-months, reaching an intra-day high of 129.91.

The dollar index, a broad measure of the greenback's strength, rose 0.11%, retracing some of yesterday's weakness, last trading at 95.91 as the Asian session was coming to a close.

Investors are eyeing the US nonfarm payrolls report for June, to be released later in the day. A weak reading could confirm investors' concerns about a potential change in the Federal Reserve's current thinking about further monetary policy tightening. Economists are expecting US employers to have added 179 thousand jobs last month, above May's gain of 138K. At the same time, unemployment is forecasted to remain at 4.3% and average earnings to increase 0.3% month-on-month.

The euro has been under pressure against the dollar, falling to $1.1415 towards the end of the Asian session. An upbeat German industrial production figure provided some support to the euro, though it was short-lived. Production rose 1.2% in May, month-on-month, well above the expected 0.3% and the prior month's 0.7% gain, potentially signalling a strong second quarter.

Sterling also weakened against the dollar, after two days of gains, last trading at $1.2953 ahead of the European session. A surprise in May's industrial production in the UK could lead to significant moves in pound/dollar when it gets released at 8:30 GMT. Economists are expecting a gain of 0.5% month-on-month, up from April's 0.2%.

Oil prices continued to be under pressure for the third consecutive day. West Texas Intermediate tumbled 1.3% to $44.94 a barrel, while Brent crude fell 1.1%, to last trade at $47.6 a barrel.

Gold slipped to 1,221.85 an ounce. The precious metal has not managed to recover following its plunge on Monday, making this week's loss its worst performance since early May.

Traders could also focus on a two-day G20 summit in Germany that starts today for clues about the economic policy of the world's major economies.

The US dollar fell yesterday after nearly four straight sessions of the gains. The declines came as the ADP private payrolls rose less than expected. While economists were expecting a headline print of 184k, ADP/Moody's data showed that private payrolls rose just 158k. The jobs numbers for May were also revised down to 230k. Later in the day, the ISM non-manufacturing index rose to 57.4, beating estimates of 56.5 and up from May's 56.9. But the data couldn't help the greenback to recover.

Looking ahead, the US nonfarm payrolls data will be coming out later today. Expectations are for a headline jobs print of 175k, while the average earnings are expected to rise 0.3% on the month. The US unemployment rate is expected to remain steady at 4.3%. Canada will also be releasing the jobs report. Canadian unemployment rate is expected to stay put at 6.6%, unchanged from the previous month, while the Canadian economy is expected to add 11.4k jobs during June.

The BoE Governor, Mark Carney will also be speaking later in the day, followed by Canada Ivey PMI data.

EURUSD intraday analysis

EURUSD (1.1419): The EURUSD recovered sharply to regain the $1.1400 handle. The gains came as the ECB policy meeting minutes showed that members of the governing council were considering to remove the pledge for further easing. So far, the euro is reacting positively to any hints of hawkish messages from the ECB. The rally to 1.1400, however, comes with risk. A possibility of a lower high forming here could signal a longer-term decline back to 1.1300 and potentially to 1.1129. This bearish bias could however change should the EURUSD manage to hold at the current levels and push past the previous highs of 1.14450.

GBPUSD intraday analysis

GBPUSD (1.2972): The British pound continued to edge higher with price action seen testing the resistance level at 1.2975. If the resistance level holds out here, we could expect a reversal to the downside. GBPUSD could be potentially testing the support at 1.2800 which previously served as resistance. On the 4-hour chart, the current rally to 1.2875 signals a lower high in the making. It is best to wait for a reversal pattern here before considering the correction towards 1.2800. The BoE Governor Carney’s speech today could add some volatility, although the broader expectations are that the comments could be hawkish

USDJPY intraday analysis

USDJPY (113.65): The USDJPY is seen attempting to break above the 113.36 handle. This level marks the completion of the bullish flag pattern. Price action could be seen consolidating at the current levels with the risk to the downside. Failure to post a convincing close above 113.36 on a daily basis could signal a correction towards 112.00 - 111.72 level of support. On the daily chart, price action has already showed a few sessions closing nearly flat which suggests that the upside momentum could be fading. Today's nonfarm payrolls report could be crucial as this could help push the currency pair higher. Watch for an intraday break below 113.36 to confirm the correction to 112.00.

Cable is holding narrow range on Friday, awaiting US NFP report. Thursday's rally on weaker dollar moved the pair away from 1.2900 zone, where daily cloud top offered support and contained recent pullback from 1.3029 peak.

Bullish technical studies favor further upside, however, US jobs data are seen as key driver on Friday.

Scenario of lower than expected US jobs numbers in June would boost sterling for fresh probes above 1.3000 barrier, with break above recent tops at 1.3029/47 to open next key resistance at 1.3109 (Fibo 38.2% of larger 1.5016/1.1930 descend.

Conversely, upbeat NFP release could depress pound for renewed attack at pivotal 1.2904/1.2893 supports (daily cloud top / 05 July correction low), violation of which would trigger deeper pullback and expose next supports at 1.2873 (55SMA) and 1.2837 (30SMA).

Res: 1.2983, 1.3000, 1.3029, 1.3047
Sup: 1.2948, 1.2904, 1.2893, 1.2873

The Euro remains firm and holding above 1.1400 handle in early Friday’s trading, ahead of US non-farm payrolls report (forecast for June 175K vs 138K in May).

The single currency rallied on Thursday after downbeat US ADP and weekly jobless claims depressed the dollar. ADP report showed private sector employment fell to 158K in June, undershooting forecast for 185K new jobs and staying well below 230K in May, while weekly jobless claims rose by 4K to 248K above forecasted 243K.

The Euro is eyeing recent tops at 1.1445, to fully retrace 1.1445/1.1312 correction and resume towards next target at 1.1500 on firm break higher.

Technical studies are in firm bullish setup and support further advance.

Session low at 1.1406 marks initial support, followed by the top of thick 4-hr cloud at 1.1371, which is expected to ideally contain dips.

Res: 1.1445, 1.1500, 1.1527, 1.1578
Sup: 1.1406, 1.1371, 1.1330, 1.1312

EUR/USD

The EUR/USD pair trimmed most of its weekly losses and re-surged above the 1.1400 level, getting an expected boost from the ECB's account of the monetary policy meeting, as the document showed that policymakers discussed removing the pledge to increase their bond-buying program if needed in their policy communication, but decided to be cautious as the economic recovery has yet to result in higher inflation, and to prevent upsetting financial markets. Further supporting the advance was receding demand for the greenback, after data released this Thursday disappointed, particularly that related to employment. The ADP survey showed that the private sector added 158K new jobs, below the expected 185K, while weekly unemployment claims for the week ended June 30th surged to 248K from previous 244K. A positive surprise came from the final services PMIs, as the official ISM index came in at 57.4, well above expectations of 56.5, whilst the Markit index jumped to 54.2 from an initial estimate of 53.0.

Speculative interest will now focus on the upcoming US NFP report to be release this Friday with the country expected to have added 179K new jobs in June, and the unemployment rate to remain steady at 4.3%. The worst-than-expected employment numbers released ahead of the report may lower the bar a bit, but anyway, seems unlikely that even with a positive surprise, the greenback can change course.

From a technical point of view, the pair remains around its daily high and not far from the yearly one set at 1.1445, with technical readings supporting additional advances, given that in the 4 hours chart, indicators maintain their strong upward momentum in positive territory, whilst the 20 SMA has turned higher below the current level. The pair has a strong static resistance in the 1.1460 level, with a break above it probably fueling the advance, at least short-term, towards the 1.1490 region first, an up to 1.1525 then.

Support levels: 1.1380 1.1340 1.1290

Resistance levels: 1.1460 1.1490 1.1525

USD/JPY

The USD/JPY pair ends the day barely higher for a second consecutive day, having been contained within Wednesday's range, but holding near the twp-month high set this week and meeting buying interest on retracements towards 112.90, a Fibonacci support. The pair struggled for direction as poor US employment data should have sent it lower, but higher Treasury yields dented yen's demand. Also, limiting the advance was the sour tone in worldwide equities as most major indexes closed in the red. Japan will release its preliminary May leading and coincident index during the upcoming Asian session, expected with the first expected above April's figure, but the second below it. Technically, the pair presents a neutral-to-bullish stance in the short term, as in the 4 hours chart, the 100 and 200 SMAs keep advancing below the current level, with the shortest accelerating above the largest, but technical indicators have lost upward strength and hover around their mid-lines. Upcoming direction depends on the NFP outcome, with a huge positive surprise favoring an advance up to 114.40 a major static resistance area.

Support levels: 112.90 112.50 112.10

Resistance levels: 113.70 114.05 114.40

GBP/USD

Broad dollar's weakness and comments from BOE´s Ian McCafferty sent the GBP/USD pair to its highest in three days, with the pair settling near a daily high of 1.2983. Investors preferred to sell the American currency ahead of US employment data, particularly after some minor reports released this Thursday came worse-than-expected, while McCafferty said that raising rates would not only be justified, but also "prudent." He was one of three members of the MPC that voted for a hike in the latest meeting, surprising little markets, but backing the Pound anyway. The UK will release industrial and manufacturing May figures this Friday, alongside with the same month trade balance, which may set the tone for the pair, ahead of the US employment report. After correcting down to 1.2892 this week, the pair is now poised to resume its advance, although gains beyond the critical 1.3000 threshold are still in doubt, as the pair has been unable to sustain gains beyond it this year, topping in May at 1.3047. In the short term, the 4 hours chart shows that the price recovered after meeting buying interest around the 23.6% retracement of its latest daily rally at 1.2925, while also setting above the 20 SMA that lost its bearish strength. In the same chart, technical indicators aim modestly higher, with the RSI at 59, but the Momentum still stuck around its mid-line.

Support levels: 1.2925 1.2890 1.2860

Resistance levels: 1.2995 1.345 1.3080

GOLD

Spot gold closed the day at $1,224.10 a troy ounce, little changed for a third consecutive day, and with a modest advance supported by dollar and equities' weakness. Speculative interest was left clueless after the latest FOMC Minutes showed that US policymakers are split on the rate hike outlook, hoping some clearer clues will surge from the US employment report to be released this Friday. The commodity heads into the Asian session near the 2-month low set at 1,217.40, now the immediate support, with a bearish tone according to technical readings, given that in the daily chart, the price remains far below its 20 and 100 DMAs, while hovering around its 100 DMA, as technical indicators resumed their declines within bearish territory. In the 4 hours chart, the price hovers around a bearish 20 SMA, unable to detach from it, while the Momentum indicator heads nowhere around its 100 level and the RSI indicator hovers around 40, all of which limits the upward potential. Still a disappointing US report may boost the commodity, with gains above 1.228.00 required to confirm additional gains ahead next week.

Support levels: 1,217.40 1,208.30 1,198.20

Resistance levels: 1,228.00 1,236.50 1,241.80

WTI CRUDE OIL

Crude oil prices surged over 2% intraday, but ended the day in the red, with West Texas Intermediate futures ending the day around $45.40 a barrel. WTI traded as high as 46.51, boosted by the EIA report that showed that US crude supplies dropped by 6.3 million barrels in the week ended June 30th, largely surpassing the 1.6 million barrels decline forecasted. The API report released late Wednesday also reported a slide of 5.76 million barrels. Gasoline investors also decline, by 3.7 million barrels. Yet at the end of the day, speculation that the worldwide glut will persist, weighed more. The daily chart shows that the price settled at the lower end of its Wednesday's range, still above a flat 20 SMA, but below the 38.2% retracement of its latest decline, the immediate resistance at 45.90. The Momentum indicator in the mentioned chart aims marginally higher within neutral territory, while the RSI turned south, heading lower around 47. In the 4 hours chart, the technical outlook is bearish, with technical indicators heading sharply lower within negative territory and with the price having been rejected from convergent 20 and 200 SMAs at 46.60.

Support levels: 44.40 43.70 43.10

Resistance levels: 45.90 46.60 47.20

DJIA

Wall Street plunged, with the Dow Jones Industrial Average posting a three-digit lost of 158 points, and settled at 21,320.04. The Nasdaq Composite shed 1.0%, or 61 points, and closed at 6,089.46, its lowest since mid May, while the S&P ended at 2,409.75, down by 22 points. The decline was led by technical and energy shares, while the negative tone of their overseas counterparts weighed on investors' mood. Within the Dow, only two members closed up, El du Pont that added 0.42%, and Wall-Mart that closed 0.33% higher. General Electric on the other hand, led decliners, down 3.91%, followed by Intel that shed 1.99%. The daily chart for the DJIA shows that the index settled below its 20 DMA, whilst technical indicators entered bearish territory with a sharp downward slope, maintaining the risk towards the upside. In the 4 hours chart, technical indicators also head sharply lower, now nearing oversold territory, whilst the index accelerated further below its 20 and 100 SMAs. The 200 SMA stands as a key support at 21,278, with a break below it favoring a retest of last week's low at 21,195.

Support levels: 21,305 21,278 21,228

Resistance levels: 21,361 21,417 21,459

FTSE100

The FTSE 100 turned back south this Thursday, ending the day down 30 points at 7,337.28, following the lead of its European counterparts, undermined by new evidence that the ECB is on its way towards a tighter economic policy. The mining sector led the way lower within the Footsie, with Glencore leading decliners with a 2.52% loss, followed by Fresnillo that shed 2.45%. Associated British Foods was the best performer, up 2.57%, followed by Barclays that added 2.42%. The technical outlook for the index is bearish, as in the daily chart, it fell sharply from its 100 DMA, currently at 7,372, whilst technical indicators head south within bearish territory. Shorter term, and according to the 4 hours chart, the risk is also towards the downside, with the index contained by a bearish 20 SMA, the Momentum indicator heading sharply lower within bearish territory, and the RSI indicator heading south around 39, all supporting further declines on a break below the weekly low of 7,327.

Support levels: 7,327 7,294 7,256

Resistance levels: 7,372 7,424 7,452

DAX

The German DAX closed the day at 12,381.25, down 72 points or 0.58%, with European indexes dragged lower by industrial and pharmaceutical equities. Receding dollar's demand pushed local currencies higher, alongside with speculation of upcoming monetary policy tightening, also weighing on local shares. Within the DAX, only five members closed higher, with Volkswagen leading the advance with a 1.31% gain, followed by Commerzbank that added 1.23%. ProSiebenSat.1 led decliners, down 4.06%, followed by Bayer that shed 2.29%. The index fell further in after-hours trading, entering the Asian session around 12,350 and with a strongly bearish technical stance, as in the daily chart, the index is pressuring its 100 DMA, whilst technical indicators resumed their declines, now nearing oversold levels. In the 4 hours chart, technical readings also favored the downside, as the benchmark stands below a bearish 20 SMA, whilst technical indicators also head south within bearish territory.

Support levels: 12,310 12,272 12,239

Resistance levels: 12,398 12,445 12,490

USDCAD has been in a downtrend since the May 5 high of 1.3792. After falling from this more than one-year high, the pair touched a low of 1.2911 on July 4 and made a slight correction higher. However, prices are finding it difficult to enter back into the key 1.3000 handle.

The bearish market structure remains intact and there are no signs of a reversal in the trend yet. USDCAD is trading below the 200-day moving average, which asserts a bearish view. Meanwhile the downward sloping 50-day MA is suggesting there is downside pressure in the market.

A further decline from current levels would see a re-test of the July 4 low at 1.2911, which would act as an immediate support level. A break below this could accelerate downside momentum to bring a resumption of the downtrend with scope to target the next support level at the September 7 low of 1.2821 and then from here the June 23 low of 1.2677 would act as another support area.

The daily RSI momentum indicator is attempting to rise out of oversold territory, suggesting that the market could retrace in the near-term or consolidate recent losses. If the RSI continues to move higher and further away from oversold levels at 30, then USDCAD could pick up momentum and rise. But the pair could find immediate resistance at 1.3013 (July 5 high). A successful break above this barrier would bring into view a key psychological level at 1.3200. Another important resistance area is located at the 200-day MA at 1.3340, which capped upside moves on June 21 and 22.

Looking at the daily chart, only a rise above the 200-day MA would change the current bearish bias and bring the market to a more neutral phase. A break above resistance at 1.3550 would shift the bias to a more bullish one.