Dollar Falls After Negative Job Data and Gold Hits 1223 Level

The Dollar Index (USD/DXY) rebounded to post mild gains following the US December Payrolls report

Dollar Falls After Negative Job Data and Gold Hits 1223 Level

Low Dollar high Gold

The Dollar Index (USD/DXY) rebounded to post mild gains following the US December Payrolls report. Weaker-than-expected US Jobs Gains were offset by a rise in Wages while the Jobless rate held at the lowest level since 2000. The US Trade Deficit in November swelled to near six-year highs.

Wall Street rallied while Treasuries dipped. The yield on the US Ten year note climbed 3 basis points to 2.48%

 

Outlook: The ability of the US Dollar to rally against most of its Rivals in spite of a weaker-than-expected Jobs Report was due to short-covering. The first CFTC/Reuters report for 2018 (week ended Jan 2) showed speculators raised their net short US Dollar bets to the highest level since mid-December. The Dollar was sold hard in the past three weeks and looks overstretched. And a corrective bounce is likely

 

Trading View: As we begin the first full trading week of the year, it’s all about market positioning.

The CFTC/Reuters report saw a large rise in speculative long US Dollar bets to total USD 4.62 billion for the week ended January 2. This is a marked increase from the previous week’s USD 460 million. And surprise, surprise … the bulk of this net short positioning comes from a big increase in net long Euro bets.

The rise in the US Ten Year yield to 2.48%, up three basis points was not matched by those of its peers apart from Canada. After the robust Canadian Employment report, Ten Year Canadian Bond yields rallied 7 basis points to 2.15%.

 

A few things to note:

Don’t forget the data, they will gain more influence as trading markets normalize this week. Today starts off with Swiss CPI, the Euro Zone Sentix Investor Confidence report and the Bank of Canada’s Business Outlook Survey. The BOC report is highly regarded as a source of the bank’s timing in relation to interest rate decisions. Following Friday’s better-than-expected Canadian Employment report, this will be closely watched.

The ECB’s non-monetary policy meeting is on Tuesday together with Australia’s December Building Approvals. Germany’s Trade balance, Industrial Production and Euro Zone Unemployment data are also due out tomorrow.

Crucial US PPI, CPI and Retail Sales for December are out toward the week’s end.

Lots to feast our trading eyes on.

 

The Dollar Index (USD/DXY) managed to recover and finish at 92.013, up 0.16% from 91.854 Friday. The immediate support at 91.70/80 held with the overnight low traded at 91.775. Immediate resistance in the USD/DXY is at 92.20 and then 92.50. Immediate support remains at that 91.80 level. Likely range today 92.00/30.

 

EUR/USD – traded up to 1.20825 immediately following the release of the US Payrolls report. However, the Euro failed to break above that level and finished the New York session lower at 1.2029. Immediate resistance today lies at 1.2050 and then 1.2080. While the 1.2080 level caps we should see a further drift lower. Immediate support comes in at the 1.20 00/10 level. A breakthrough 1.2000 should see 1.1950. Likely range 1.1980-1.2050. Sell rallies

 

EUR/USD

 

USD/JPY – rallied to 113.30 overnight high before settling at 113.05. The Dollar rose as a result of the gain in the US Ten Year yield. USD/JPY has immediate resistance at 113.20/30. Immediate support can be found at 112.80 and then 112.60. Likely range today 112.80-113.20. Prefer to sell rallies

 

USD/JPY

 

AUD/USD – The Aussie had a minor setback earlier in the trading day on Friday after a deterioration in Australia’s trade balance. AUD/USD fell from 0.7870 to 0.7850 before bouncing back to close at 0.7865, little-changed from Friday. Bear in mind that the Aussie was trading near 0.75 cents and looking heavy at the start of December. On Friday it almost touched 0.79 cents. AUD/USD has immediate resistance at 0.7875 (which was the overnight high). The next resistance level lies at 0.79 cents. Immediate support can be found at 0.7840/50 and then 0.7820. Likely range today 0.78300-0.7870. Prefer to sell rallies on the day.

 

AUD/USD

 

GBP/USD – mostly sidelined with the overall trading range 1.3523-1.3582/ GBP/USD closed at 1.3565 (1.3562 Friday). News reports suggest that the UK government faces a possible cabinet reshuffle this week. Sterling will be dictated mostly by the moves in the Dollar and the Euro. Brexit remains a risk. Likely range 1.3530-1.3580, prefer to sell rallies.

 

GBP/USD

 

USD/CAD – The Lonnie soared against the US Dollar following the stellar Canadian Jobs report. USD/CAD slumped to 1.2385 overnight lows before settling a touch higher to close at 1.2415 (1.2495 Friday morning). USD/CAD found immediate and strong support at the 1.2385 level and that should hold in the short term. Immediate resistance can be found at 1.2450 and then 1.2480. Likely range today 1.2385-1.2455. Prefer to buy USD/CAD dips.

 

USD/CAD

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***Information contained in this newsletter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making but merely provides information from the market for its clients as additional information is made available as per the events occurring in the financial markets.

 

HIGH RISK WARNING:

Trading Foreign Exchange (Forex) and Contracts for Differences (CFD’s) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.

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