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Traders Prepare For Weaker Payrolls – Are They Right?

Dear Traders,

It’s payrolls day and the dollar is clearly tending toward weakness ahead of the first relevant event of the year. Yesterday’s employment data came in mixed with private-sector payroll growth slowing in December while the non-manufacturing ISM index was in line with expectations. Many market participants expect the December employment figures to be weaker, putting the greenback under further selling pressure in the run up to the report. Even if this assumption is correct, wage growth will take center stage in today’s job report. After disappointing November figures average hourly earnings are expected to tick up to 0.3 percent and it is precisely this or a stronger uptick that is needed to put the dollar back in the bullish track. If, however, all key figures of the report disappoint, the greenback will suffer further losses. Let’s wait and see.

The Non-Farm Payrolls report is scheduled for release at 13:30 UTC today.

The euro took a glimpse at the upper side of 1.06 but was not able to hold onto that high level. It will now hinge on the jobs report whether there is still room for further gains toward 1.0650/70. On the downside, traders should keep an eye on the 1.0480-support level. Below 1.0480 we expect the euro to fall back toward the 1.04-mark.

The British pound rose above 1.24 but fell back into its former 1.2350-90-resistance area, which now could prove as a new support for the pound. Below 1.2350 we see a lower bound at around 1.2320. If the pound declines below 1.2270 we expect the bias to shift from bullish to bearish. Above 1.2440, however, we may see a continuation of the upward move, heading for 1.25 and 1.2550. But the price action will depend on the outcome of the payrolls.

We wish you a beautiful and relaxing weekend.

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All Eyes On U.S. Payroll Report

Dear Traders,

The biggest story in the markets yesterday was the British pound which dropped like a stone after the Bank of England unleashed a stimulus package to combat the post-Brexit fallout. All MPC policy makers have unanimously decided to cut interest rates for the first time in seven years while further rate cuts may follow later this year if the economic outlook proves to remain grim. BoE Governor Carney said in his statement that the central bank “took these steps because the economic has changed markedly”, declaring that all elements of the stimulus can be taken further, including another rate cut. Furthermore, the BoE cut its growth forecast for 2017 to 0.8 percent from 2.3 percent (the most ever) and lowered its 2018 predictions. All this was enough for sterling bears to drive the pound lower towards 1.31. A next support area could now be at 1.3085-1.3065. Once the 1.3060-level gives way to the downward pressure, we could see sterling falling towards 1.30.

The euro remained largely unchanged against the U.S. dollar and traded comfortably between 1.1150 and 1.1115. We were a bit unlucky with our short-entry at the lower bound of the euro’s trading range which was exactly triggered before the price reversed. We now focus on a break below 1.11 before shifting the attention to the 1.1050-support. Euro bears should rather wait for prices below 1.1050 in order to sell the euro towards lower levels. However, above 1.1190 the euro may head for another test of 1.1230. A current resistance is seen at 1.1275.

Chart_EUR_USD_4Hours_snapshot5.8.16

Today it’s payrolls-day again and all eyes will be on the highly anticipated U.S. labor market report at 12:30 UTC. The monthly jobs report will provide more information on whether the Federal Reserve can raise interest rates in 2016. The report is expected to show a slower job growth in July after the strong increase in June but this does not necessarily mean that dollar bulls have no chance this month. Market participants will also pay close attention to the unemployment rate and wage growth figures and if these headlines come in with a positive surprise the dollar will rally. In case of any disappointments however, the greenback might be vulnerable to losses.

We wish good trades and a beautiful weekend.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2016 Maimar-FX.

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Payrolls To Be A Glimmer Of Hope For The USD

Dear Traders,

Bulls take control of both major currency pairs, although the British pound struggled with an extension of its recent gains. As noted in previous analysis, we still expect the pound to come under renewed pressure in the near-term and we anticipate a drop towards 1.4280 and 1.42. The technical picture is discussed later on. The euro, however, tested the 1.14-barrier after the 1.13-support has proved to be resilient.

All eyes will be on the U.S. Payroll report scheduled for release at 12:30 GMT today. Nonetheless a strong report probably wouldn’t be a game changer for the Fed’s outlook after Mrs. Yellen sent a clear signal to proceed cautiously. In case of a strong labor market report the highest importance is attached to a much-needed acceleration in wage growth. Average hourly earnings must show an uptick in order to revive any strength in the U.S. dollar. However, if wages fail to show acceleration the greenback could suffer further losses.

Furthermore the most important leading indicator for payrolls – the ISM Manufacturing index – is only due for release after the jobs report (14:00 GMT) but could still affect the price action in the USD.

Let’s have a look at the technical picture:

EUR/USD

It all depends on the demand for USD but given the recent uptrend channel upside movements could be limited until 1.1420. Once the euro breaks above 1.1430 it could head toward the key resistance at 1.15. However if NFP numbers are strong the dollar could strengthen, leading to a correction in the recent uptrend. Current supports are seen at 1.13 and 1.1220, but given the bullish bias euro bulls are likely to buy any pullback.

Chart_EUR_USD_4Hours_snapshot1.4.16

GBP/USD

After peaking at 1.4459 the pound favored the downtrend and is now facing an important support at 1.43. Once this support has been significantly breached to the downside, we expect the pound to drop towards 1.4250 and 1.42. Below 1.4190 it could even decline towards 1.4150 and 1.4060. After the break above 1.44 turned out to be unreliable for sterling bulls, it might be better to wait for prices above 1.4435 and further 1.4465.

 

Chart_GBP_USD_4Hours_snapshot1.4.16

We wish every trader profitable trades.

Have a nice weekend.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

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British Pound Extends Losses

Dear Traders,

The pound sterling dropped like a stone, breaking easily through $1.4230 after Bank of England governor Mark Carney said that “now is not yet the time to raise interest rates”. He highlighted global economic risks weighing on inflation and said that inflation “will likely remain very low for longer”. His comments dashed investors’ hopes for an early rate hike and sent the pound sharply lower toward its next target at 1.41.

Ahead of Carney’s speech an unexpectedly uptick in core consumer price index has driven GBP to a weekly high at 1.4340, which now marks a faraway resistance for the currency pair. We will now turn our focus to the next lower barrier at 1.41. A sustained break below that level could push sterling towards 1.4050 and 1.40, important price levels where the cable may gain some ground. However, upward movements could currently be limited until 1.42 and 1.4235.

Today we will focus on the next important economic report from U.K. which will be labor market data, due at 9:30 GMT, here in particular Average Weekly Earnings. Wages are forecast to show a decline, which could put further pressure on the currency.

The EUR/USD marked a current support at 1.0859 from where it started a relief rally toward its resistance area at 1.0985. In case of a renewed test of this resistance it should be interesting whether the euro will be able to break above 1.10, pointing towards a higher target at 1.1035. However, the current upward momentum could be deceptive ahead the European Central Bank meeting tomorrow. ECB president Mario Draghi may deliver a more dovish than-expected message to talk down the euro. Euro traders should prefer to turn their focus to a downside break of 1.0830 and 1.08 rather than an upside break of 1.0985.

We have some interesting U.S. data scheduled for release today. U.S. Consumer Prices are due at 13:30 GMT along with the release of U.S. Building Permits. If CPI figures surprise to the upside, the greenback could trade higher against its major peers. 

Daily Forex signals:

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2016 Maimar-FX.

www.maimar.co