The Dollar Maintains Despite the Negative NFP Report

The Dollar slipped on a weaker-than-expected US March Employment Gain and weighed by the ongoing trade spat between China and the US

The Dollar Maintains Despite the Negative NFP Report

Dollar maintains

The Dollar slipped on a weaker-than-expected US March Employment Gain and weighed by the ongoing trade spat between China and the US. On Friday, President Trump ordered a review of an additional tariff on US$ 100 million imports from China.  The volatility due to trade tensions was mostly felt in equities with Wall Street dropping over 2% at the New York close.
Currency markets were largely nonplussed. The Dollar Index (USD/DXY), a measure of the Greenback against Six Major Rivals fell 0.42% to 90.06 (90.45 Friday).

Outlook:

Monday morning, where do we begin from here? The ongoing trade dispute between China and the US will continue to grab the market’s attention with no major economic data releases today. Tweets and interviews made over the weekend suggest no backdown. Chinese President Xi gets his chance to hit back at the Boao Forum for Asia (China’s answer to Davos) on the island of Hainan.
A disappointing March payrolls gain was offset by better than forecast rise in wages while the US Unemployment rate kept at a 17 year low. March’s weak employment numbers were affected by unusual snowstorms with the 3-month average at 202,000 for 2018 versus 182,000 for 2017.

Trading View:

While the Dollar slipped on Friday, it finished the week mildly higher against most of its Rivals. The latest CFTC/Reuters report (week ended 27 March) saw large speculators further unwind their long Euro and short Yen bets. Speculators added further to their long GBP bets while cutting their long Aussie bets to Zero.

On Friday, Federal Reserve Chairman Jerome Powell said that the Fed will likely need to keep raising interest rates to keep inflation under control. Chicago Fed President Charles Evans (a noted dove) said: “he is optimistic inflation will reach the Fed’s 2 percent goal and that slow, gradual rate increases will be appropriate.”
US Headline and Core CPI data are released on Wednesday.  An increase in both Annual CPI data is expected.

The Dollar Index (USD/DXY) finished just above the immediate support level of 90.00 (90.06). The overnight high traded was 90.60 which remains strong resistance. Immediate resistance can be found at 90.20/30. Immediate support lies at 90.00 and 89.90. The Dollar Index is consolidating in a range between 89.80 and 90.60. Expect more of that today.

EUR/USD – While the Euro rallied to close at 0.25% higher at 1.2282, it finished the week lower, failing to rally above 1.2300. We saw last week that Euro area economic indicators, for the most part, missed expectations. EUR/USD has immediate resistance at 1.2290-00 and 1.2320. Immediate support lies at 1.2250 and then 1.2220. Likely range today 1.2230-1.2330. Look to sell any rallies.

EUR/USD

USD/JPY – slipped off its highs at 107.46 to 106.95 at the close as trade tensions rose between the US and China and stocks slumped. While the US DOW tumbled 2.34%, USD/JPY only managed an overnight low of 106.775. A week ago we would’ve found ourselves closer to 105.00. The negative sentiment toward the USD/JPY has eased. USD/JPY has immediate support at 106.70 and then 106.50. Immediate resistance can be found at 107.10 and then 107.40. Look to buy dips with a likely trading range today of 106.60-107.60.

USD/JPY

GBP/USD – had a decent bounce once again off the low 1.40/s to close up at 1.4093, just under the 1.4100 level. The Pound has continued to gather decent support near the 1.400 level while the US Dollar consolidates around these levels against its other Rivals. A more optimistic outlook on Brexit and expectations of a UK rate rise in May have buoyed the British Pound. GBP/USD has immediate resistance at 1.4100/10 and then 1.4120. Immediate support can be found at 1.4070 and 1.4040. Look to sell any rallies with today’s likely range 1.4030-1.4130.

GBP/USD

AUD/USD – slip sliding away, closing marginally weaker at 0.7675 (0.7685 Friday). The Aussie remains under pressure, particularly on the crosses wedged between the US-China trade dispute. A broad-based US Dollar rally could see further pressure on the Australian Dollar with an initial target of 0.7500. AUD/USD has immediate support at 0.7650 (overnight low 0.76526). The next support level is found at 0.7630 and then 0.7590. Immediate resistance lies at 0.7700 (overnight high 0.76995) and then at 0.7720. Likely range today 0.7640-0.7710. Look to sell rallies.

AUD/USD

USD/ZAR – The rand (USD/ZAR) strengthened slightly in early afternoon trade on Friday, after US jobs and employment data was released. 

“The US dollar is slightly under pressure at the moment with USD/ZAR trading lower at R12.05/$,” said Treasury ONE in a snap note on Friday afternoon. 

By 15:29 the local unit was trading at R12.02 to the greenback. While this is 7 cents better than its intraday low of R12.09, it is still weaker than its opening price of R11.97.

USD/ZAR

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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 Forex (Foreign Exchange) 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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