U.S. Payrolls To Take Back Seat To Election Uncertainty

Dear Traders,

It is payrolls-day again but this time, U.S. employment data is however not the market’s main concern. Market participants are bracing for election volatility and severe turbulence with only few days to go before the Nov. 8 presidential election between Hillary Clinton and Donald Trump. Traders are adjusting dollar positions to avoid risks ahead of the historical U.S. vote. The market became more nervous since Clinton’s lead over Trump has shrunk in the past days while a Trump victory has not yet been priced in. The dollar recently weakened against its counterparts in the light of that increasing uncertainty about the outcome.

Economists are looking for U.S. nonfarm payrolls to climb by 175k last month whereas a healthy report would reinforce the assumption that the Federal Reserve will raise interest rates next month. If the report falls however short of expectations, the greenback could face another round of weakness. The payrolls report is scheduled for release at 12:30 UTC.

Technically, the euro finds itself in a current trading range between 1.1125 and 1.1050. Looking at the daily chart we see that the downward channel is still unbroken, which could predict upcoming bearish momentum in the EUR/USD. As long as the euro remains below 1.1150 we see a higher likelihood for a downward movement.

chart_eur_usd_daily_snapshot4-11-16

However, we do not expect today’s NFP report to change the sentiment in the euro as big market players remain risk-averse ahead of next Tuesday/Wednesday – and that’s what we are doing.

The GBP/USD broke above the falling trend line of its recent downward channel and further gains might be possible but let’s be surprised and prepare for both bullish and bearish scenario. A new support could be at 1.2340 whereas a next major resistance is only seen around 1.2670.

chart_gbp_usd_4hours_snapshot4-11-16

Have a nice weekend!

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