Dollar Moves Down With Non Farm Payrolls Looming

by Phil Moore May 7, 2014

Global markets look indecisive at present, a state which is likely to remain unchanged until the end of the week. All eyes are focused on the US economy and in particular, the Non Farms Payrolls report due for release on Friday. As a result, markets are unlikely make any major headway in either direction ahead of this release.

Last week the dollar actually ended lower, with many of the recent lagging markets posting gains against the greenback. Sterling was one of these, with the FTSE also benefiting from the latest UK growth figures which showed the economy avoiding a ‘triple dip’ recession.

Given the importance of US economic news due for release this week, binary options traders are advised to trade with caution. Markets should be watched particular closely on Friday in particular. For those people who are intent on trading Friday it is best to let the markets settle for an hour or so after the release of the figures.

Key News This Week

In Focus - USD/JPY

95.34 provides near term support to pullbacks and any moves below this level could well see further near term falls to the 94.50 region. The overall trend however is seen as bullish.

Pulling back but holding above 97.00 (97.20 support held) the pair has so far been unable to break the significant 100.00 level. I would use pullbacks lower to position long for a break of 100.00, possibly this week.

Currency Majors

EUR/USD - The pair remains moving in a defined range of around 300 pips (1.3250-1.2950). Impetus to break out from this range could come this (Non Farm payrolls) or next (Rate decision). Until this point trading this range looks the most sensible move.
USD/JPY - See above
USD/CHF - Having pulled back following touching a longer term trend line in place since July 2012, the bias is to the downside for now. Look for support at 93.90 or 92.00 (strong) as offering the chance to go long.
GBP/USD - Propelling higher after better than expected GDP figures, the Pound is more likely to succumb to a longer term downtrend in the following days than see additional gains. 1.5580 could prove a reversal point if reached.

Major Indices

DOW - This week is likely to see muted moves as the market marks time ahead of Fridays major news. 14400 shows a good level of support while 15000 will remain in sight and could be breached on Friday.
NASDAQ - The Nasdaq continues to consolidate its gains as the global markets look for the next impetus to push them into a new price range. Strong support exists at 3200 while a break of 3300 would provide a good opportunity to go long.
FTSE - Gains in the FTSE off the back of the economy avoiding a triple dip recession have helped to support the market. It looks increasing likely that recent highs at 6530 could be tested if we end the week with a positive tone from the US.

Commodities

Oil – Pricing looks like a move lower could be ready to take place with 94.80 looking like a good place to go short. On a break lower expect to see a wider test of 80.00 over the coming days and weeks.
Gold – Gold remains below the falling channel support which has dictated price movement from the end of Aug 2012. This currently comes in around 1504. Stay bearish below this level.

Stocks

A number of major global stocks which are of interest to binary options traders report this week. These include oil major BP, Pfizer, Time Warner, and Rolls Royce.