Dollar is down again before the Non-Farm Payrolls report today, and gold is rebounding above the 1320 level
Month-end flows and position adjustments saw the Dollar slip ahead of today’s US Payrolls data. The Euro managed to climb back above 1.1900 in choppy trading. The Dollar Index (USD/DXY) closed down 0.24%. US Personal Spending rose last month but missed expectations. Oil prices jumped, lifted by US Gasoline prices which rose for the eighth straight day in the aftermath of Hurricane Harvey.
Economic data releases were mixed.
China Manufacturing PMI: 51.7 against forecast 51.3 and previous 51.4
China Non-manufacturing PMI: 53.4 against a previous 54.5
Australia August Private CAPEX: 0.8% against forecast 0.2%. Previous 0.3% revised up to 0.9%
German Retail Sales: -1.2% against a forecast -0.5% and previous 1.7%
Euro Zone Headline CPI: 1.5% against forecast 1.4% and previous 1.3%
Euro Zone Core CPI: 0.1% against forecast 0.1% and previous 0.1%
Canada: Q2 GDP: 0.3% against forecast 0.2% and previous 0.1%
US Weekly Jobless Claims: 236,000 against forecast 237,000 and previous 235,000
US Core PCE: 0.1% against forecast 0.1% and previous 0.1%
US Personal Spending: 0.3% against forecast 0.4% and previous 0.2%.
US Chicago PMI: 58.9 against forecast 58.7 and previous 58.9
US Pending Home Sales: -0.8% against forecast 0.4% and previous 1.3%
Wall Street stocks extended their rally, leading global shares higher. The US S&P 500 closed at 2471.00, up 0.57%.
Brent Crude Oil prices jumped to US$ 52.75, up 2.85% from US$ 50.65 yesterday
USD/DXY – closed lower at 92.633 from 92.924.
EUR/USD – finished higher at 1.1907 (1.1883 yesterday)
USD/JPY – ends 0.47% lower at 109.98 from 110.34 Thursday
AUD/USD – rallies to close up 0.51% at 0.7947 (0.7900)
GBP/USD – finishes little-changed at 1.2930 (1.2920 yesterday)
Outlook: Welcome to payrolls Friday. After a nervous, choppy trading session yesterday, traders are cautious heading into today’s payrolls numbers. The Dollar had managed to rally off multi year and multi month lows against the Euro, Yen and other Rivals. The upcoming NFP data will be the market’s focus. This will determine whether the besieged US Dollar is in a corrective mode or has found a temporary bottom. Private sector employment earlier this week saw 237,000 jobs created, the largest increase in 5 months. Therefore, the market is primed for a good number today which suggests that it would need to be better to lift the Dollar. Wages and the participation rate will also be scrutinized. China reports it’s Caixin manufacturing data, while Germany, the UK and Euro Zone see their Manufacturing PMI data releases.
Events and economic data releases today:
China Caixin August Manufacturing PMI (GMT 2.45 am, Sept 1/Local Time 11.45 am, Sept 1): forecast for Manufacturing PMI 50.9 from previous 51.1
Swiss July Retail Sales (GMT 7.15 am, Sept 1/Local Time 5.15 pm, Sept 1): previous data 1.5%
German August Markit PMI (GMT 7.45am, Sept 1/Local Time 5.45 am, Sept 1): forecast 59.4 from previous 59.4
UK August Manufacturing PMI (GMT 8 am, Sept 1/Local Time 6 pm, Sept 1): forecast 55.0 from previous 55.1
Euro Zone August Manufacturing PMI (GMT 9 am, Sept 1/Local Time 6 pm, Sept 1): forecast 51.4 from previous 51.4
US AugustNon Farms Payrolls (GMT 12.30 pm, Sept 1. Local Time 10.30 pm, Sept 1): forecast 180,000 from previous 209,000
US August Unemployment Rate (same time as NFP): forecast 4.3% from previous 4.3%
US August Average Hourly Earnings (same time as NFP): forecast 0.2% from previous 0.3%, Annual 2.6% from previous 2.5%
US Labour Force Participation Rate (same time as NFP): previous participation rate 62.9 %
US August ISM Manufacturing PMI (GMT 2 pm, Sept 1/Local Time 12 am, Sept 2): forecast 56.5 from previous 56.3
Trading View: The last NFP numbers saw a choppy reaction from the markets because the actual payrolls number of 209,000 well exceeded the forecast of 182,000. The previous number was revised up to 231,000 from 222,000. The jobless rate stayed at a low of 4.3% while earnings rose from the previous month. The Dollar spiked immediately following the impressive data, stayed bid for a few days, eventually succumbing to overwhelmingly bearish sentiment. We would need to see a decent payrolls number of 200,000 or higher to see a further US Dollar recovery and perhaps a decent bottom is formed. Market positioning is already overstretched. Anything less than a 180,000. jobs gain would see further pressure heaped on the Dollar.
EUR/USD – The Euro slumped to an intra day low of 1.1823 yesterday in choppy trading. The bounce enabled the Single currency to rise back above the 1.19 threshold, closing at 1.1907. This morning EUR/USD has traded to a high of 1.19227, currently settling at 1.1912. There is immediate resistance at 1.1930/40 and 1.1970. Short term support can be found at 1.1900 and then at 1.1880. Markets will consolidate today with the likely range today 1.1880-1.1930.
USD/JPY – The Dollar managed to trade up to 110.67 highs before eventually settling lower to close at 109.98. The overnight low traded was 109.879 where immediate support can be found. There is resistance at 110.30 and 110.60. North Korea has shifted to the background, for now. According to state media, North Korean leader Kim Jung on has called for more missile launches targeting the Pacific to advance his country’s ability to contain Guam. Over the weekend the North Korean head is capable of anything. Likely range today 109.90-110.60.
AUD/USD – Strong metals prices saw the Australian Dollar rally off its overnight low of 0.7871 to close 0.51% higher (0.7947). Copper prices rose 0.4% while the CRB Index jumped 2.25%. Private capital expenditure rose 0.8%, better than the forecast of 0.2%. AUD/USD has immediate support at 0.7905 and then at 0.7870. Resistance can be found at 0.7960. The Aussie should consolidate between 0.7910-60 today.
GBP/USD – Sterling has been pretty much sidelined most of this week. GBP/USD finished little-changed at 1.2930 (1.2920 yesterday). Brexit uncertainty continues to constrain the Pound. UK Manufacturing PMI data is due out later on today. GBP/USD has immediate resistance at 1.2940 (1.2935 overnight high). Immediate support can be found at 1.2910. Likely range today ahead of the US NFP is 1.2910-1.2960.
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