Markets Look To NFP Figures For Clues To Dollar Movement

The highly anticipated NFP (Non Farm Payrolls) figures on Friday end what is a fairly packed set of economic data due for release over the next five days. Key focus will be on whether a better than expected set of figures will prompt the Fed into reducing its level of QE at its next meeting.

While the dollar has made good headway against most major currencies over the past few weeks, a number of rate decisions this week could help to accelerate this trend. The most important of these by the European Central bank, while it is not expected to yield any major surprises, is unlikely to support the Euro with rates anticipated to stay on hold. The Bank of England is expected to maintain the status quo following governor Mark Carneys previous remarks on interest rate levels.

Early focus this week is also on event risk for the Australian  dollar. This kicks off with the Bank of Australia rate decision on Tuesday, followed by the both Quarterly and Year on Year GDP figures. While no imminent move in rates is expected, there could be calls for a lowering of rates to help encourage growth in the economy.

Elsewhere of note, we have rate decisions due for release on the Canadian Dollar (Wednesday) and also a Press Conference from the Bank of Japan scheduled for Thursday. Latest reports from Canada indicate a softening economy which could see the Central bank indicate a dovish bias and further calls for the CAD. All in all this is a fairly big week for markets. We could end up seeing some big moves.

Key News This Week

In Focus

Gold – The gold price was heavily influenced by both technical and fundamental factors last week with a move above $1400 seeing a push towards the $1450 level. However a subsequent pull back below $1400 makes the metal susceptible to further losses over the week. Look lower.

Currency Majors

EUR/USD - Last week’s fall below saw the pair end negative on the month. A move below the 20 day SMA has left the pair vulnerable to further near term falls. Use 1.3220 as a pivot. A move below sets up further falls.

USD/JPY - Moves from the low at 96.82 set the pair up for additional gains as the week progresses. Look higher with a potential for a run at the 100.00 level as the week progresses. A break and close above the falling trend line would sets up scope for further gains.

USD/CHF -  Last week’s gains look to have carved out a low in the pair setting up the potential for further gains. The 0.9320-30 looks to so far have constrained price movement. However a break and close of this level would add impetus to creditably to the view that a longer term low is in place.

GBP/USD -  the pair moved lower over the course of the week to find support above the 1.5410 level. A break of this level would expose the lower rising trend line and would likely signal further falls. We would expect a break of 1.5420 so see the pair move lower this week towards 1.5200.

Major Indices

DOW - Falling back towards support at the 14500 level, the DOW posted another week of losses. 14700 offers the first major level of support. It could be worth going long anticipating a bounce from here. In any event the 14500 level should see a move back higher.

NASDAQ - In a volatile week for the tech Index, further falls were seen. However we would expect current support at 3580 to hold in the face of further negative news. 3500 should provide a solid level of support in the event of an overshoot of the aforementioned level.

FTSE - Despite falling over the course of the week the FTSE found strong support just above 6400. Go short on a move below but ultimately look higher from this level.

Commodities

Oil – A huge push higher to the $112 level was quickly sold back last week, with the price of crude ending back below $108.00 per barrel. This spike in price does not provide a very convincing technical picture. From here we would see the bias as lower over the coming sessions, with a preference to sidestep this market for opportunities elsewhere.

Gold - See above