Focus on NFP report

Dear Traders,

Last Friday was characterized by an ongoing demand for U.S. dollars. The pound sterling stopped its fall at 1.5135, from where it recovered slightly. Given the oversold situation in the GBP/USD, chances are that GBP may head for another test of 1.5260 and 1.5285. The EUR/USD has found a support at around 1.1125/10. In order to revive fresh bearish momentum, the pair would need to break below 1.1080. Above 1.1220, euro bulls could drive the pair towards 1.1270 and 1.1315, but traders should be careful with any buy-attempts, as the focus is on Friday’s Non-farm Payrolls report and profit taking is likely to occur ahead of the report before investors could jump back into dollar long positions.

After Yellen’s hawkish comments last Thursday, market participants will watch the NFP report closely. The market is pricing in a rate increase by the end of the year, so depending on the details of the payrolls report, an October tightening could be the case. On the other hand, if the report falls short of expectations, we could see a short rally in the EUR and GBP.

This week starts off with interesting U.S. data such as PCE indices, scheduled for release at 12:30 GMT followed by Pending Home Sales due for release at 14:00 GMT.

Important economic reports this week:

Tuesday – German Consumer Prices and U.S. Consumer Confidence

Wednesday – German Unemployment and Eurozone Consumer Price Index

Thursday – U.S. ISM Manufacturing Index

Friday – Non-Farm Payrolls

Moreover, central bank officials are scheduled to speak this week, including Yellen, WilliamsDudley and BoE governor Carney.

We wish you a good start to this week.

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