Euro Slides, DXY Rebounds; US Payrolls Up Next

Euro Slides, DXY Rebounds; US Payrolls Up Next

JPY Climbs, Bond Yields Ease, Stocks Mixed

Summary:

The US Dollar edged up against all its Rivals bar the Japanese Yen. The latest Claims for Unemployment benefits in the US dropped to 228,000, lower than median forecasts of 236,000. The fall was the lowest reading in 4 weeks.

The Dollar Index (USD/DXY), a popular gauge of the Greenback’s value against a basket of 6 major currencies, rebounded to 103.62 from 103.47 yesterday.

The Euro (EUR/USD) reversed 3 days of gains, sliding to 1.0840 from 1.0880. The latest meeting minutes from the ECB revealed concerns about inflation together with a weaker growth outlook. Sterling (GBP/USD) climbed against the Greenback to 1.2670, up from 1.2645 yesterday.

Against the Japanese Yen, the Dollar (USD/JPY) dipped to 145.55 from 145.80 yesterday. US bond yields eased, leading global rates down. The 10-year US Treasury yield was last at 4.11% (4.12%).

Germany’s 10-year Bund yield closed at 2.46% from 2.51%. The UK 10-year Gilt rate was last at 4.35%, down from 4.42%. Australia’s 10-year bond yield slid 8 basis points to 4.02%.

The Australian Dollar (AUD/USD) was little changed at 0.6480 (0.6483) while the Kiwi (NZD/USD) edged lower to 0.5965 from 0.5970. China’s PMI data saw Manufacturing PMI climb 49.7 from 49.3. Chinese Non-manufacturing PMI though, dipped to 51.0 from 51.5 previously.

The Greenback finished mixed against the Asian and EMFX. USD/CNH (Dollar-Offshore Chinese Yuan) was last at 7.2750 (7.2850). USD/SGD (Dollar-Singapore Dollar) rallied to 1.3512 from 1.3495.

Global stock prices were mixed. The DOW was last at 34,730 (34,865) while the S&P 500 finished at 4,510 from 4,518 yesterday. Australia’s ASX 200 rose to 7,265 from 7,252.

Other economic data released yesterday saw Japan’s Annual Housing Starts in August tumble to -6.7% from -4.8%, and expectations at -1.3%. US August Personal Spending increased to 0.8% from an upward revised 0.6% (0.5%). US August Personal Income dipped to 0.2% from 0.3% previously.

EUR/USD – The Euro reversed its gains made in the past few days, sliding to close at 1.0840 in New York from 1.0880 yesterday. The overnight low traded was 1.0782, before rebounding at the New York close. The overnight high recorded was 1.0941.AUD/USD – The Aussie Battler finished little changed against the Greenback, settling at 0.6480 from 0.6483 yesterday. In choppy trade, the overnight low for the Aussie was at 0.6461. The overnight high recorded was 0.6508.USD/JPY – Against the Japanese Yen, the US Dollar finished lower, at 145.55 from 145.80 yesterday in volatile trade. Overnight, the Greenback traded to a high of 146.23 before easing. The overnight low recorded was 145.35.GBP/USD – Sterling rallied modestly against the Greenback to finish at 1.2670 (1.2645 yesterday). The overnight high traded for the British Pound was 1.2735 while the overnight low recorded was 1.2653. There were no major UK economic data releases yesterday.On the Lookout:

Today’s economic calendar picks up as we come to the last trading day of the week and into a new month.

Australia kicks off with its August Judo Bank Final Manufacturing PMI (f/c 49.4 from 49.6 – ACY Finlogix).

Japan follows next with its Jibun Bank August Final Manufacturing PMI (f/c 49.7 from 49.6 – ACY Finlogix), and Japanese August Capital Spending (y/y f/c 5.4% from 11% - ACY Finlogix).

Australia follows with its July Home Loans (m/m f/c -1% from -2.8% - ACY Finlogix).

China follows with its Caixin August Manufacturing PMI (f/c 49.3 from 49.2 – ACY Finlogix).

The UK starts off European data with its UK August Nationwide Housing Prices (m/m f/c -0.3% from -0.2%; y/y f/c -3.9% from -3.8% - ACY Finlogix).

Switzerland follows with its August Inflation Rate (m/m f/c 0.2% from -0.1%; y/y f/c 1.5% from 1.6% - ACY Finlogix) and Swiss August PMI (f/c 40 from 38.5 – ACY Finlogix).

Italy follows with its August Manufacturing PMI (f/c 46 from 44.5 – ACY Finlogix), French August Manufacturing PMI (f/c 46.4 from 45.1 – ACY Finlogix), German August Manufacturing PMI (f/c 39.1 from 38.8 – ACY Finlogix), Eurozone August Manufacturing PMI (f/c 43.7 from 42.7 – ACY Finlogix).

Italy follows with its Final GDP Growth Rate (q/q f/c -0.3% from 0.6%; y/y f/c 0.6% from 1.9% - ACY Finlogix).

Canada starts off North American data with its Canadian GDP Growth Rate (q/q 0.3% from 0.8% - ACY Finlogix), Canadian June GDP (m/m f/c -0.2% from 0.3% - ACY Finlogix), and Canadian August S&P Global Manufacturing PMI (f/c 49.2 from 49.6 – ACY Finlogix).

The US rounds up today’s busy data releases with its US August Average Hourly Earnings (y/y f/c 4.4% from 4.4% - ACY Finlogix), US August Non-Farm Payrolls (f/c 170k from 187k – ACY Finlogix), US August Unemployment Rate (f/c 3.5% from 3.5% - ACY Finlogix).

Finally, the US releases its Final August S&P Global Manufacturing PMI (f/c 47 from 49), US ISM August Manufacturing PMI (f/c 47 from 46.4 – ACY Finlogix) and US ISM Manufacturing Employment (f/c 44.2 from 44.4 – ACY Finlogix).

Trading Perspective:

Welcome to Payrolls Friday. The US August Non-Farms Payrolls report is widely expected to show a median jobs creation of 170,000 (ACY Finlogix and FX Street).

Forex Factory has 169,000 jobs created.

If the Jobs creation number comes in less than 170,000 (say 150,000), expect a large fall in the US Dollar.

On the other hand, the Jobs Creation number would have to be around 200,000 or higher to see a strong US Dollar rally.

Keep an eye on the Unemployment rate (widely forecast at 3.5%) and Wages (Average Hourly Earnings). Average Hourly Earnings are expected to climb 0.3% monthly from 0.4%. A Wages rise of 0.4% or higher would see a strong Dollar rally.

The risk then could be for a weaker Jobs Creation report and lower wages. It makes for an interesting finish to this week.

EUR/USD – The Euro slid to close near its lows at 1.0840 weighed by broad-based US Dollar strength and a bearish outlook on the European Central Bank. The contrast between a more hawkish leaning Federal Reserve and an uncertain ECB will continue to weigh on the Euro. Immediate support lies at 1.0830 followed by 1.0800 and 1.0770. Immediate resistance can be found at 1.0880, 1.0930 and 1.0960. Look for the Euro to trade in a choppy range today, likely between 1.0820-1.0920. Risk is still lower for the Euro. (Source: Finlogix.com)

AUD/USD – The Australian Dollar finished little changed against the Greenback at 0.6480 from 0.6483 yesterday. Look for immediate support at 0.6460 (overnight low traded was 0.6461). The next support level is found at 0.6430. Immediate resistance on the Aussie lies at 0.6510 (overnight high traded was 0.6508). The next resistance level is found at 0.6540. Look for the Aussie to trade a likely range today of 0.6450-0.6550.USD/JPY – The Dollar edged lower against the Japanese Yen to finish at 145.55 from 145.80 yesterday as US bond rates eased. Look for immediate support at 145.35 (overnight low) followed by 145.05. Immediate resistance can be found at 145.85, 146.05 and 146.35. Look for more choppy trade in the USD/JPY pair, likely between 145.25-146.25. Trade the range until the US Payrolls report is out.GBP/USD – Sterling rallied against the Greenback, settling at 1.2670 in New York from 1.2645 yesterday. Look for immediate resistance today at 1.2700 followed by 1.2730 (overnight high traded was 1.2734). The next resistance level lies at 1.2760. On the downside, look for immediate support at 1.2650 (overnight low traded was 1.2653). The next support level lies at 1.2620. A strong US Payrolls report could see Sterling break through support at 1.2600. A weak US Jobs number should see Sterling spike above 1.2750. Expect more choppy trade in this currency pair. Happy days.

Have a happy trading Payrolls Friday and top weekend ahead all.

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