Special report: US Jobs Preview â€“ Eye on Hourly Earnings
Today’s report: Softer US Dollar Confronts Employment Report
The market hasn't really cared much about a solid round of China PMIs, with sentiment turning lower ahead of today's all important monthly employment report out of the US. Other data on the day includes Eurozone unemployment, UK manufacturing PMIs, US ISM manufacturing and Michigan confidence.
Chart talk: Major markets technical overview video
- Eurozone inflation
- Dreadful reading
- Q1Â Tankan
- Equities downturn
- China PMIs
- data overshadowed
- US employment
- Dollar direction
Chart talk: Technical & fundamental highlights
EURUSD â€“ technical overview
The market remains well supported on dips, breaking to fresh 2016 highs.Â But overall, the broader downtrend remains intact and with the price now trading up towards 1.1500, there is risk for another topside failure and bearish reversal. Look for additional upside to remain well capped below 1.1500 on a daily close basis, while ultimately, only back above 1.1709 would force a shift in the structure. A break below 1.1311 will help to strengthen this outlook and alleviate immediate topside pressure.
- R2 1.1495Â â€“ 15Oct highÂ â€“ Very Strong
- R1 1.1412Â – 31Mar/2016 highÂ â€“Â Medium
- S1 1.1311Â – 31Mar low â€“Â Medium
- S2 1.1284Â â€“30Mar low â€“Â Strong
EURUSD â€“ fundamental overview
The Euro was bid up to a fresh 2016 high on Thursday, continuing to find demand on the back of this week’s dovish Yellen speech. A decent round of Eurozone inflation and softer US initialÂ jobless claims also factored into the price action, though the market did retreat off the highs on better thanÂ expectedÂ Chicago PMIs and month end, quarter end position squaring.Â Cautious comments from Fed Dudley and hawkish rhetoric from Fed Evans have mostly been shrugged off, with the focus now shifting to today’s highlyÂ anticipated monthly employment report out ofÂ the US. But ahead of the US employment report we get Eurozone manufacturing PMIs and Eurozone unemployment. Also out in the US post NFPs are US ISM manufacturing and Michigan confidence.
GBPUSD â€“ technical overview
TheÂ recovery rally out from a recent 7 year low has stalled out ahead of key resistance at 1.4668,Â potentially setting the stage for the next major lower top and bearish resumption. A daily close below 1.4053 will strengthen this outlook and expose a retest of 1.3836,Â which guards against the multi-year base at 1.3500 further down. Back above 1.4668 would be required to take the immediate pressure off the downside.
- R2 1.4459Â â€“ 30Mar high â€“Â Strong
- R1 1.4372 â€“Â 1Apr highÂ â€“ Medium
- S1 1.4283Â â€“ 28Mar high Â â€“Â Medium
- S2 1.4195Â â€“ 29Mar lowÂ â€“Â Strong
GBPUSD â€“ fundamental overview
The Pound recovery has stalled out over the past few sessions with Brexit overhangÂ and some softer local data weighing on the UK currency. While the UK final GDP read did manage to exceed expectation, this was more than offset by the dreadful current account showing, with the deficitÂ ballooning to record levels. Looking ahead, we get some UK manufacturing PMIs, though most of the attention will be on the later release of the monthly employment report out of the US. US ISM manufacturing and Michigan confidence are also scheduled for release on Friday.
USDJPY â€“ technical overview
The recentÂ break below the previous multi-month low from February was a significant development, as it potentially warns of a fresh downside extension ahead following a period of multi-day consolidation. At this point, a daily close below 111.00 would be required to strengthen this prospect, though any rallies in the interim should be very well capped ahead of 115.00. Ultimately, only back above 115.00 would force a shift in the structure and take the pressure off the downside.
- R2 113.80Â â€“ 29Mar high â€“Â Strong
- R1 112.80Â â€“ 30Mar high â€“Â Medium
- S1 112.02Â â€“ 30Mar lowÂ â€“Â Medium
- S2 111.38Â â€“ 22Mar lowÂ â€“Â Strong
USDJPY â€“ fundamental overview
A better than expected round of China PMIsÂ has done very little to propÂ sentiment in early Friday trade, with Asia equitiesÂ under pressure. This has weighed on the major pair, with setbacks also fueled by theÂ disappointing Japanese Tankan reading. Looking ahead, the key focus for the day will be on the upcoming monthly employment report out of the US. Also out in the US are ISMÂ manufacturing and Michigan confidence.Â
EURCHF â€“ technical overview
The latest round of setbacks fromÂ fresh multi-month highs at 1.1200 have been well supported, with theÂ broader outlook still highly constructive. Look for anyÂ additional weakness in the sessions ahead to continue to be supported above 1.0800, in favour of aÂ higher low and the next major upside extension through 1.1200, towards 1.1500 further up. Only a close below 1.0715 would delay the outlook.
- R2 1.1024Â â€“ 17Feb highÂ â€“Â Strong
- R1 1.1000Â â€“ PsychologicalÂ â€“Â Medium
- S1 1.0875Â â€“ 23Mar lowÂ â€“Â Medium
- S2 1.0810Â â€“ 29Feb/2016 low â€“Â Strong
EURCHF â€“ fundamental overview
Economic data out ofÂ Switzerland has been better of late, as reflected through the trade balance and KoF leading indicator, and there could be signs of an alleviation of intense deflationary pressures. And yet, with the Franc still deemed to be well overvalued, the SNB remains committed to its current policy strategy of intervention and negative rates. The SNB’s job has been a lot easier of late, with the EURCHF rate stable despite more ECB stimulus and accommodations elsewhere, and this should giveÂ the central bank the flexibility it needs to keep from making any additional easing moves. But the global backdrop is still shaky and any signs of renewed downside pressure on equities, could invite unwanted CHF appreciation, something the SNB needs to continue to closely monitor.
AUDUSD â€“ technical overview
An impressive run for this pair over the past several days, with gains extending to fresh 2016 highs. However, the run is starting to look a little stretched and there is risk for a pullback and potential bearish resumption. Still, a break back below 0.7477 would be required toÂ strengthen this outlook and take theÂ immediateÂ pressure off the topside.
- R2 0.7800Â â€“ FigureÂ â€“Â Strong
- R1 0.7723 â€“Â 31Mar/2016 high â€“Â Medium
- S1 0.7615Â â€“ 30Mar low â€“Â Medium
- S2 0.7558Â â€“ 28Mar highÂ â€“Â Strong
AUDUSD â€“ fundamental overview
The Australian Dollar has performed rather well this week, trading up to a fresh 2016 high on Thursday ahead of this latest minor pullback. Most of the gains in the currency have come on the back of dovish Yellen speak and aÂ repricing of Fed expectations. However, a stronger Australian Dollar is notÂ something the RBA will be welcoming of and medium-term players have begun to reassert short positions into this latest bout of strength. Even the impressive round of FridayÂ China PMIs has done little to inspire gains, with Aussie pulling back on aÂ deterioration in sentiment. Looking ahead, the monthly employment report out of the USÂ will be watched closely, while US ISM manufacturing and Michigan confidence are also due.
USDCAD â€“ technical overview
Signs of a potential bottom after the market stalled ahead of the critical October base at 1.2832. The market will need to establish back above 1.3296 to strengthen this outlook and accelerate gains, setting up a possible double bottomÂ and bullish resumption. But while the market holds below 1.3296, a deeper drop to test the October 2015 base at 1.2832 should not be ruled out.
- R2 1.3167Â â€“ 28Mar low â€“Â Strong
- R1 1.3081Â – 30Mar high â€“Â Medium
- S1 1.2969Â â€“ 1Apr lowÂ â€“Â Medium
- S2 1.2858Â â€“ 31Mar/2016 lowâ€“ Strong
USDCAD â€“ fundamental overview
An impressiveÂ round of Canada GDP data helped to extend the Canadian Dollar’s rally to another fresh 2016 high on Thursday, before the marketÂ reversed quite sharply into the close on broader flows. It seems the combination of renewed downside pressure in the price of OIL, solid Chicago PMIs and aÂ deterioration in risk sentiment were the primary drivers offsetting Canadian Dollar strength. The Loonie has also enjoyed a very nice ride since its near 13 low against the Buck back in January, andÂ medium-term players are starting to reassert long US Dollar exposure into this dip. Looking ahead, Canada manufacturing PMIs are due along with US ISM manufacturing and Michigan confidence, though most of the attention will unquestionably be placed on the release of the US monthly employment report.
NZDUSD â€“ technical overview
Despite gains over the past several days, theÂ market still remains confined to a broader downtrend with rallies continuing to be very well capped ahead of the key psychological barrier at 0.7000. However, a break back below 0.6841 will be required to strengthen the outlook and expose fresh declines towards next key support at 0.6668 further down. Ultimately, only a weekly close aboveÂ 0.7000 compromisesÂ the bearish outlook.
- R2 0.6967Â â€“ 31Mar/2016 high â€“ Very Strong
- R1 0.6937 â€“Â 1Apr highÂ â€“Â Medium
- S1 0.6841Â â€“ 30Mar lowÂ â€“Â Medium
- S2 0.6716Â â€“ 29Mar lowÂ â€“Â Strong
NZDUSD â€“ fundamental overview
It seems the New Zealand Dollar is still being used as a proxy for risk, with theÂ currency outperforming over the past week on the back of some dovish Yellen speak and a welcoming market reaction. However, there are plenty of signs of a cooling in the New Zealand economy, and this in conjunctionÂ with an undesiredÂ higher exchange rate and subdued inflation, make any rallies into medium-termÂ resistance around 0.7000 veryÂ attractive sell opportunities for medium-term players. Solid China PMIs have done little to prop Kiwi on Friday and there are signs ofÂ cooling off after Thursday’s fresh 2016 high. Looking ahead, the monthly employment report out of the US is sure to be the primary volatility driver, though US ISM manufacturing andÂ MichiganÂ confidence should not be overlooked.
US SPX 500 â€“ technical overview
This latestÂ multi-day rally is classified as corrective, with any additional upside expected to be well capped below 2100 on a weekly close basis in favour of the next major downside extension below 1800 and towards a measured move at 1500 further down. Ultimately, only a weekly close back above 2100 will delay the bearish outlook.
- R2 2083.00 â€“ 29Dec highÂ â€“ Strong
- R1 2074.00 â€“ 30Mar/2016 highÂ â€“Â Medium
- S1 2021.00 â€“24Mar low â€“Â Strong
- S2 2004.00 â€“ 15Mar lowÂ â€“Â Medium
US SPX 500 â€“ fundamental overview
Investors continue to find comfort in dovish Fed speak,Â with Tuesday’s Yellen comments fueling this latest push to fresh 2016 highs.Â But how long investors find comfort in gestures of additional accommodation is an entirely different question and one that could ultimately become more important sooner than later. If the market loses confidence in the ability for exhausted monetary policy gestures to stimulate the economy, or if a fresh set of headwinds emerge, there won't be much the Fed can do – a distressing prospectÂ even the Fed Chair recognizes. Looking ahead,Â most of the Friday volatility will come from the US employment report, though equities are already under pressure early on despite a solid round of China PMIs. With the Fed Chair somewhat dismissing the impressive jobs numbers, it is becoming increasingly apparent that the key component to watch is hourly earnings. Any signs of an uptick on thhis front could get the Fed leaning more hawkish, which would weigh on stocks.
GOLD (SPOT) â€“ technical overview
TheÂ market continues to show signs of a major structural shift, with the impressive recovery from the multi-year low in late 2015 at 1046, extending above the critical October 2015 peak at 1192. From here, any setbacks should be well supported ahead of 1191, in favour of a higher low and the next major upside extension to medium-term resistance at 1307. Ultimately, only a weekly close back below 1191Â would delay the newly adoptedÂ constructive outlook.
- R2 1283.50Â â€“ 10Mar/2016 high â€“Â Strong
- R1 1244.10Â â€“ 30Mar highÂ â€“Â Medium
- S1 1208.35Â â€“ 28Mar lowÂ â€“Â Medium
- S2 1191.50 â€“ Previous ResistanceÂ â€“ Very Strong
GOLD (SPOT) â€“ fundamental overview
GOLDÂ has been very well supported in recent dips, with the yellow metal finding solid demand in 2016 on the back of fears over the limitations of exhausted monetary policy and broad based currency weakness.Â But it has been this latestÂ sell-off in the Buck, following dovish Yellen speak that has inspired this week’s recovery. Still overall, whether the US Dollar is bid or not is becoming less relevant, with risk sentiment likely to be the primary driver. Any weakness on this front will continue to bolster the yellow metal.
Feature â€“ technical overview
USDSGDÂ is finally poisedÂ to turn back up after a period of intense correction. Overall, the structure remains constructive, with current dips seen well supported into the 78.6% fib retrace off the 2015-2016 low to high move at 1.3425.Â Look for the market to find a meaningful base in the 1.3400sÂ ahead of the next major upside extension. Ultimately, only a weekly close below 1.3400 would compromise the outlook.
- R2 1.3737Â â€“ 28Mar high â€“Â Strong
- R1 1.3583Â â€“ 30Mar highÂ â€“Â Medium
- S1 1.3425Â â€“ 78.6% Fib Retrace â€“Â Strong
- S2 1.3412Â – 31Mar/2016 lowÂ â€“ Strong
Feature â€“ fundamental overview
Tuesday’sÂ dovish speech from the Fed Chair has proven to be a major support for emerging market currencies.Â Contrary to recent Fed speak, Yellen has come out dismissing any sense of imminence for future rate hikes and this has been having aÂ stabilising influence over risk correlated assets, withÂ yield differentials concurrentlyÂ widening back in favour of these markets. The Singapore Dollar has rallied back toÂ freshÂ yearly highs in response, but could start to find stiff resistance into critical USDSGD fibonacci support. Looking ahead,Â the market will start to position for today’s all important monthly employment report out of the US. Risk sentiment has come off into Friday despite a solid round of China manufacturing data, something that is already weighing on the Singapore Dollar.