So after that wait, the August NFP day is finally here. For businesses, this date has probably been on the calendar for several weeks now, as the path to reducing assets depends to a large extent on a strong labor market, given that inflation had reached its target a few months ago.
After the start of the year seemed strong, new wage bills fell sharply than expected in April and May as the last wave of the pandemic hit hard, leaving analysts wondering when the Fed will consider growing inflation concerns as it reduces its net asset purchases. And just as summer arrived, we received some comments from members of the Federation confirming that the timing of the austerity depends on the labor market, and so the NFP became a monthly indicator.
Data has been on a steady path since June and is therefore much driven by today’s figure, as strong redness is likely to mean asset reductions begin before the end of the year, not early 2022, allowing for a larger gap in time for interest rates to rise.
However, the latest ADP figure has raised some concerns about reading today, although it has little predictability over the NFP reading. However, it allows markets to measure the positioning of investors before release and taking into account yesterday’s sales US dollar, expectations are quite tight when it comes to advertising, so this figure is likely to be over 700K USD positive.
USD /JPY: the pair has played nicely in the symmetrical pattern I referred to last week although I admit that I would have liked to have seen a clearer direction by now. I was expecting a break of over 110.5 to then turn to 108.50 this week, but the pair seem to be taking longer to secure the pattern than before. The stronger Dollar may rise to 110.50 today at the end of business and therefore set the scene nicely to flip over early next week, but so far the USD / JPY appears to be anchored around the 110.00 mark, which is roughly where it was when I wrote about it on Thursday.
USD / JPY daily schedule
USD /CAD: the pair has failed to gain much momentum after falling back to 1.26 after the 19th break attempt.th August and yesterday’s withdrawal seems a bit exaggerated for today’s session. There is significant support nearby (127.2% at Fib 1.2496) where the 200-day SMA is approaching, followed by the 1.24 mark as the 100-day SMA is approaching, and so I expect sellers to be below that range. difficult. On the right, both the RSI and the stochastic show plenty of room to push higher, but the pair must hold above 1.2660 before a further rise can be considered.
USD / CAD daily schedule
EUR/ USD: the pair have made an impressive setback in the last two weeks and are now back at 1.1875 for the first time since early August. Buyers aim to break above 1.19, but the bullish run seems a bit exaggerated at the moment, so I wouldn’t be surprised if this level were more of a barrier in the short term. Pulling is likely to bring the pair back to the 1.18 mark, with a 50-day SMA likely to provide short-term support.
EUR / USD daily schedule
– Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin