US Nonfarm Payrolls are set to show an increase of around 600,000 jobs in October after a gain of 661,000 in September. The Unemployment Rate is forecast to fall from 7.9% to 7.7%. In terms of this month’s payroll number, there will probably be no big reaction as the main event for the market remains the US elections.
The vote count is still going on in many states but the market is pricing a Biden Victory. The Republicans will still hold the Senate though so it’s not the “Blue Wave” the Market was looking for before the election but the USD has still weakened.
Yesterday Fed meeting was as expected: “Fed officials did not announce any new policy action, and changes to the post-meeting statement were minimal, but the chairman once again struck a fairly dovish tone at the press conference.”(TDS Securities)
The Dollar Index DXY which measures the USD against a basket of currencies still remains weak (see chart below) and we are trading above the bottom of a channel which has been in place since late August. Speculators are heavily short, we do have a bearish extreme and the USD is pricing in a lot of bearish news. If we can rally today, Monday we would expect more USD strength. In terms of trading individual pairs key off big round numbers as per previous updates
In terms of cross trades, the NZD has been firm in the crosses and is overbought and we view it as a sell – charts of EUR/NZD and NZD/CAD below.
DXY Dollar Index: The DXY has traded in a sideways channel since late August and we are trading near the bottom of the range – we are looking for a move to the top of the range to take out the large number of speculators who are short.
EUR/NZD Daily Chart Swing Trade Set Up: The EUR has held the 1.7400 level and is up on the day – if we can breakout above 1.7520 through resistance we would expect follow through buying up to 1.7800 with possible follow on to 1.8000.
NZD/CAD Daily: Swing Trade Setup: We have seen a rally and we are coming up to test the 0.8900 level – If the level holds we would see the NZD as a sell below the 0.8800 level and if we were to rally through the 0.8900 level we would look for the breakout to fail and sell back through 0.8900 with stop protection behind the August highs.
Research provided by LCTO
The given data provided contains additional information, forecasts, analysis and market reviews published on the Key to Markets website.
Before making any investment decisions, you should know that:
– Key to Markets publishes analysis of any kind solely for information purposes and should not be construed as investment advice or recommendation.
– Key to Markets will not be liable for any loss or damage arising from any such decision.
– Whilst all reasonable efforts are made to ensure that all content sources are reliable and that all information is presented, as far as possible, in a comprehensible, timely, accurate and complete manner, Key to Markets does not guarantee the accuracy or completeness of any information contained in the analysis.
– Before making any investment decisions you should understand how leveraged products work as they are speculative in nature and may result profit and losses. Please, before starting to trade, you should make sure that you understand all the risks.