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Pound rises even as inflation tops 11%The British pound has moved higher on Wednesday. In the European session, GBP/USD is trading at 1.1934, up 0.56%. The pound roared on Tuesday, gaining close to 1% and punching past the 1.20 line for the first time in three months. It has been a busy time for sterling, which has been marked by sharp swings that would make an exotic currency blush. The pound's volatility has been especially pronounced in the month of November. The US dollar has hit a rocky patch and the pound has taken full advantage, climbing 3.5% this month. UK inflation continues to rise and hit a staggering 11.1% in October, a 41-year high. The upward trend continued despite the government introducing an energy price guarantee. Inflation jumped from 10.1% in September and ahead of the consensus of 10.7%. Core CPI remained unchanged at 6.5%, but was higher than the forecast of 6.4%. The Bank of England hasn't been able to stem rising inflation despite tightening policy but will be hoping that its jumbo 0.75% hike earlier in November will take a bite out of the next inflation report. The UK economy is facing a double-whammy of high inflation and a recession, and all eyes will be on Finance Minister Jeremy Hunt, who will announce the government budget on Thursday. Hunt will aim to restore the government's credibility and stability, after the recent political soap opera which resulted in three different prime ministers in a matter of months and significant financial instability. The UK employment report on Tuesday was lukewarm, with unemployment ticking higher to 3.5%, up from 3.4%. The Bank of England will be concerned about the increase in wage growth, which will create even more inflation. Wages excluding bonuses rose to 5.7%, up from 5.5% and ahead of the consensus of 5.6%. The BoE will be under pressure to continue hiking aggressively, even though this will hurt the struggling UK economy. GBP/USD has pushed above resistance at 1.1878. The next resistance is 1.2030 1.1767 and 1.1660  are providing support
by OANDA
1
USDCAD range bound unless it breaks...The USDCAD is currently consolidating at the 1.35 price level following the significant reversal from the 1.38 resistance level. Canadian employment data on Friday signaled an improving job market which added strength to the Canadian dollar. If the USDCAD breaks below the 1.3470 price level, a continuation of the downtrend can be expected, with the next key support level at 1.3250. Alternatively, if the USDCAD bounces strongly from the current level, the USDCAD could continue to fluctuate between the price levels of 1.35 and 1.38.
Short
by JinDao_Tai
US nonfarm payrolls exceed estimates againEUR/USD 🔼 GBP/USD 🔼 AUD/USD 🔼 USD/CAD 🔽 USD/JPY 🔽 XAU 🔼 WTI 🔼 The latest US nonfarm payrolls data has reflected a tight labor market, increasing 261,000 jobs in October, against projections between 200,000 and 240,000. Meanwhile, the unemployment rate has increased slightly to 3.7%, though the market expected only 3.6%. However, brief hopes for China to lift pandemic-related restrictions have strengthened major currencies toward the greenback. EUR/USD climbed and stabilized at 0.996, edging toward parity. GBP/USD added almost 220 pips to 1.1375, the Aussie/dollar pair has gained the most by rising more than 3.0% to 0.6478. USD/CAD dropped over 270 pips to 1.3478, and USD/JPY retreated to 146.59. Both stocks and commodities have recovered, and all three major stock indices have increased over 1.2% on Friday. Spot gold jumped more than $50 to $1,681.38 an ounce, as WTI oil futures returned above the $90.00 level to $92.61 a barrel.
by Mitrade_official
NZD higher ahead of employment reportNZD/USD is showing some strength today. In the North American session, the New Zealand dollar is trading at 0.5838, up 0.41%. Earlier today, NZD/USD rose to 0.5902, its highest level since September 21st. New Zealand releases its Q3 employment report on Wednesday. The data is expected to reaffirm that the labour market remains robust. Employment Change is expected to rise to 0.5% (0.0% prior) and the unemployment rate is forecast to tick lower to 3.2% (3.3% prior). The Reserve Bank of New Zealand is unlikely to be pleased if employment numbers improved in Q3, as it points to inflation remaining high. Moreover, business sentiment is soft, with businesses concerned about rising labor costs and many of them planning to raise their prices. Inflation in Q3 came in at 7.2%, and the RBNZ finds itself much further behind inflation than it had anticipated. The cash rate is currently at 3.5% and the hot inflation report has analysts projecting that the cash rate won't peak until 5.0% or even higher in early 2023. This leaves the RBNZ with little choice but to continue with oversize rate hikes, despite the spectre that high interest rates will tip the economy into a recession. The Federal Reserve will announce its rate setting on Wednesday, with CME's Fed Watch pegging the likelihood of a 75 bp hike at 86%. This would bring the benchmark rate to 4.0%. The question on the minds of investors is what happens next? The last meeting of the year is on December 14th and the Fed is expected to begin to ease its foot off the rate pedal, likely in the form of a 50-bp hike. This will depend on economic data, especially inflation. If inflation isn't showing any signs of peaking, the Fed will have to consider another 75 bp hike. There is resistance at 0.5906 and 0.5999 There is support at 0.5782 and 0.5689
by OANDA
AUD/USD eyes job dataAUD/USD is considerably lower today, trading at 0.6273, down 0.57%. Australia releases employment data on Thursday, with the markets expecting that the report will show that the labour market remains robust. The economy is forecast to have created 25,000 jobs in September, following the 35,000 gain in August. Unemployment is expected to remain at 3.5%. The strong labour market has enabled the RBA to continue its sharp rate-tightening cycle, with the cash rate currently at 2.60%. The central bank plans to continue raising rates, as the focus is on curbing inflation, which came in at 6.8% in August. The October inflation report will be especially significant, as it will be released just days before the RBA meeting on November 1st (in addition to the quarterly CPI report, Australia has started releasing a monthly inflation release, but it covers only 70% of goods and services). Higher rates will curb inflation eventually, but the cost could be an economic recession. Already, households are straining their budgets as inflation remains red-hot and higher interest rates are increasing borrowing repayments. This will likely dampen consumer spending, a key driver of economic growth. The Australian dollar has hit hard times. Since August 1st, AUD/USD has plunged 550 points, as risk sentiment has taken a beating and the Federal Reserve's aggressive tightening has boosted the US dollar. China's economy has been struggling and the escalation of the Ukraine conflict, with no end in sight, has sapped the appetite for risk-related currencies like the Australian dollar. With the Fed likely to deliver more oversize rate hikes and China and Ukraine likely to remain hotspots, the outlook does not look bright for the Aussie. AUD/USD faces resistance at 0.6331 and 0.6460 0.6250 is under pressure in support. Below, there is support at 0.6121
by OANDA
GBP/USD steady after solid UK job dataGBP/USD is in positive territory today. In the European session, the pound is trading at 1.1731, up 0.42%. GBP/USD continues to take advantage of US dollar weakness and has gained 240 points since Thursday. Inflation has hit a staggering 10.1% and the Bank of England is projecting that inflation may not peak until 13%, with some analysts predicting an even higher peak. The manufacturing, services and construction sectors are either in contraction or stagnation and the country is going through a major change, with a new prime minister and a new monarch. The UK has phased out energy imports from the UK, but the weak EU economy is taking a toll on the UK, as the two are close trading partners. The UK labour market remains robust, one of the few bright lights in a grim economic landscape. Unemployment has fallen to 3.5%, a 50-year low, but wage growth in the three months to July rose 5.5% YoY, up from 5.2%. Employment rose by 40 thousand, down from 160 thousand prior and well below the forecast of 128 thousand. For the Bank of England, the job numbers actually increase the odds of a supersize 75 basis point hike next week, as wage growth continues to rise and the labour market continues to tighten. The BoE, which has failed to show until now that it can curb spiralling inflation, may regain some credibility with a 75bp move. All eyes are on the US inflation report, which will be released later today. The markets could be treated to mixed results - headline inflation is expected to drop to 8.1% (8.5% prior), while core CPI is forecast to rise to 6.1% (5.9% prior). With the Fed intent on remaining aggressive in order to tame inflation, the markets have priced in a 75bp increase at the September 21st meeting. The inflation release should be treated as a market-mover for the US dollar and has additional importance as it is the final key release before the Fed meeting. . GBP/USD faces resistance at 1.1790. Above, there is resistance at 1.1931 There is support at 1.1689 and 1.1548
by OANDA
EUR/USD near parity, Powell speech nextThe euro has posted gains today and briefly punched above the symbolic parity line. In the North American session, EUR/USD is trading at 0.9978, up 0.11%. It seems that whatever angle you examine Germany's economy, things are not looking good. Services and manufacturing PMIs both remained in contraction territory (below 50.0) for a second straight month. The labour market, which had been a bright spot in the economy, saw the pace of job creation fall to a 1.5-year low. Today's releases didn't add any cheer. GDP in Q2 rose a negligible 0.1%, revised from 0.0%. As well, German Ifo Business Climate fell to 88.5, down from 88.7. This wasn't a sharp drop, but it was significant since it marked the index's lowest level since mid-2020. What is no less alarming than the weak numbers is the pessimistic outlook. As the war in Ukraine drags on with no end in sight, the energy crisis could get significantly worse in the winter, as Western Europe is vulnerable to a cutoff of Russian oil and natural gas. Germany appears headed towards a recession later in the year, and the rest of the eurozone will likely fare no better. The US economy contracted for a second straight quarter in Q2, but second-estimate GDP was revised upwards to -0.6%, up from -0.9% in the initial estimate. This follows a 1.6% decline in the first quarter. The upward revision was good news for the US dollar, as a weak GDP reading could have raised speculation about a Fed U-turn in policy and sent the greenback lower. The dollar's next test comes as soon as Friday, with all eyes on Fed Chair Powell's speech at the Jackson Hole Symposium. If Powell reiterates that the Fed will continue to tighten aggressively until inflation is curbed, the dollar could gain ground. However, if the Fed Chair's message is less hawkish than expected, we could see sharp gains in the equity markets at the expense of the dollar, as was the case following the surprise drop in US inflation earlier this month. EUR/USD is testing support at 0.9959. Below, there is support at 0.9877 There is resistance at 1.0113 and 1.0195
by OANDA
Market comments #1Hello everyone. I tried to put out regular market updates in the past, but I failed to do so for different reasons. This time, my idea is to gather the best tweets, articles, charts, etc., and add some brief comments. I will post these out regularly as long as I have decent material. 1. Sentiment is still very bearish, which means more upside is still possible. twitter.com 2. Soft landing team seems to be doing well so far... Until it eventually won't be doing so. I believe a scenario like 1989 is possible for markets, though I am slightly less optimistic than Jared. www.bloomberg.com twitter.com 3. Valuations can get out of hand as multiple market forces drive stocks. Stocks could trade higher and higher despite bad earnings. twitter.com twitter.com 4. The US has low unemployment, but its labor market is nowhere near as strong as it was before Covid or before the 2008 GFC twitter.com twitter.com 5. Jobs are a lagging indicator; however, as the Fed is working with lagging data, they could hike more than they should. Good news now = bad news later; therefore, the market suffers now on good news, as it 'sees' the future. twitter.com twitter.com twitter.com 6. The yield curve inverting doesn't mean we will have a crash. A recession is guaranteed at this point, but remember that the recession comes many months after the inversion. twitter.com 7. So far, this is a worse situation than 2012, 2015, and 2018; however it is nowhere near as bad as 2008 or 2020. Could it get that bad? I doubt it for now. Of course, with new data, I am ready to change my mind if I have to. twitter.com 8. Some interesting comments by Jared Dillian with whom I agree: twitter.com twitter.com 9. My main worry is what happens between the US and China in the next few months, especially in October, as I think it would be tough to avoid an invasion. Heightened tensions alone can create a lot of problems... twitter.com 10. The Turkish Lira is heading yet for another collapse. No idea what could stop the Turkish economy from falling off a cliff in the next few years. www.zerohedge.com
by BitcoinMacro
USD/CAD eyes Canada, US job reportsIt's a busy day in both Canada and the US, with both countries releasing July employment reports. It wasn't so long ago that US nonfarm payrolls was eagerly anticipated and was the most important event of the week. The NFP often had a significant impact on the movement of the US dollar. That has changed in the new economic landscape of red-hot inflation and central banks raising interest rates practically every month. The NFP has been overshadowed as the media breathlessly reports new inflation records and the threat of a recession. Still, the NFP remains an important indicator and a surprise reading can still shake up the markets. The July NFP is expected at 250 thousand, following a surprisingly strong June release of 372 thousand. A weak reading will raise concerns about a recession, which would likely see US yields and the US dollar fall. Conversely, a stronger than expected number would probably boost yields and the US dollar, as a stronger labour market would allow the Fed to remain hawkish regarding rate policy. The markets have priced in an inflation peak and the Fed winding up its rate-tightening cycle, which has sent the US dollar on a hasty retreat. Fed policy makers have been pushing back, sending out the message this week that there are more large hikes on the way as inflation is not yet under control. A strong NFP reading would reinforce the Fed's message and provide some support for the US dollar. Canada will also publish employment data later today. The economy is expected to have created 20.0 thousand jobs in July, after a decline of 43.2 thousand in May. A stronger-than-expected reading should boost the Canadian dollar, while an underperformance could result in the currency losing ground. As well, Canada releases Ivey PMI. The indicator slumped to 62.2 in June, down from 72.0, and is expected to slow to 60.3. A surprise reading could have an impact on the direction of USD/CAD in the North American session. USD/CAD is putting pressure on 1.2899. Above, there is resistance at 1.3002 USD/CAD has support at 1.2741 and 1.2686
by OANDA
NZD slides, employment report nextThe New Zealand dollar has reversed directions today and recorded sharp losses. NZD/USD is trading at 0.6285, down 0.75% on the day. Risk appetite has fallen, with US Speaker of the House Nancy Pelosi's controversial trip to Taiwan sending risk appetite lower. The New Zealand dollar has followed the Aussie, which has plunged around 1.5% today. As well, NZD/USD is under pressure from NZD/JPY, which is down 1% today due to safe-haven flows to the Japanese yen. New Zealand releases the employment report for Q2 on Wednesday. The labour market has been solid but unspectacular - in each of the last two quarters, Employment Change climbed by a negligible 0.1%, while the unemployment rate remained steady at 3.2%. Employment Change is expected to rise to 0.4% and the unemployment rate is forecast to tick lower to 3.1%. With the markets expecting only a slight change in the second quarter, I don't expect the New Zealand dollar to react unless the forecasts are wide off the mark. The Reserve Bank of New Zealand continues to grapple with soaring inflation, which rose to 7.3% in Q2, up from 6.9% in Q1. The central bank has raised rates to 2.50%, but with inflation well above the inflation target of around 2%, rates will have to keep rising in order to reel in inflation. The RBNZ is also concerned about inflation expectations, which if left unchecked will strengthen inflation and exacerbate the Bank's efforts to curb inflation. Inflation Expectations accelerated for eight straight quarters and hit 3.29% in Q1, up from 3.27% and a 31-year high. We'll get a look at Inflation Expectations for Q2 next week, and if the current trend continues and the reading accelerates, it will put further pressure on the RBNZ to respond with a large rate hike at the August 17th meeting. NZD/USD is putting strong pressure on support at 0.6271. Below, there is support at 0.6213 There is resistance at 0.6350 and 0.6408
by OANDA
Pound yawns as inflation climbsThe British pound is almost unchanged today, as GBP/USD trades at the 1.2000 line. UK inflation rose in June to its highest level since 1982, as the cost-of-living crisis has moved from bad to worse. Headline CPI hit 9.4% YoY, up from 9.1% in May and a notch above the consensus forecast of 9.3%. Core CPI dipped from 5.9% to 5.8%, matching the forecast. The UK employment report yesterday was stronger than expected, and together with the sizzling inflation numbers, there is strong pressure on the BoE to accelerate rate hikes. A strong labor market means that the economy should be able to withstand higher rate increases - the BoE has been ultra-cautious, raising rates a mere 0.25% five consecutive times. Clearly, that extent of rate tightening won't be enough to make a dent in inflation, which is approaching 10%. BoE Governor Bailey hinted in a speech yesterday that a 0.50% salvo was on the table at the August meeting. The BoE has essentially thrown in the towel in the fight against inflation, hoping that the elusive inflation peak will appear sometime later this year. The Bank expects inflation to hit 11% before easing lower. Wage growth declined sharply in the three months to May to 6.2%, down from 6.8%. With inflation rising and wage growth falling, consumers are getting hammered and the risk of a recession is high. Still, as far as the BoE is concerned, inflation remains enemy number one, and a recession is a price the central bank is willing to pay in order to reel in runaway inflation. The BoE has weathered a lot of criticism over its handling of inflation, and a 0.50% increase at the August meeting would help restore some credibility and show that the Bank is determined to stamp out inflation. GBP/USD continues to test resistance at 1.2018. Above, there is resistance at 1.2167  There is support at 1.1889 and 1.1740
by OANDA
Aussie edges up after strong US retail salesThe week wrapped up on a high note, as June US retail sales beat expectations. The headline and core readings both accelerated in June, with solid gains of 1.0%. This indicates that US consumers are still spending despite the toll that higher inflation and higher rates are taking on disposable income. The strong retail sales report will raise expectations that the Fed will be content to raise rates "only" by 0.75%, rather than a full 1.00% at the next meeting. When the markets have a chance to digest the numbers on Monday, risk appetite will likely rise, which could push the US dollar lower. China's economy slowed down in the second quarter, which is no real surprise given the Covid-zero policy which resulted in mass lockdowns. The economy posted a small gain of 0.4% YoY, missing the estimate of 1.0% (4.8% prior). On an annualized basis, GDP contracted by 2.6%, worse than the forecast of -1.5% (+1.4% prior). These weak numbers were offset by a strong bounce in retail sales, which jumped 3.10% in June, crushing the estimate of -0.3% (-6.7% prior). If China can avoid further lockdowns in key cities such as Shanghai, we can expect GDP to rebound in Q3. The health of China's economy is critical for Australia, as China is its biggest trading partner. An excellent employment report earlier this week on Thursday has raised concerns that the RBA may need to accelerate its rate-tightening cycle and consider larger rate increases. The economy gained 88.8 thousand new jobs, blowing the estimate of 30.0 thousand out of the water. As well, the unemployment rate fell to 3.5%, down from 3.9% and below the 3.8% estimate. The RBA has been raising rates aggressively, but even so, the cash rate is still at a low 1.35%, and clearly the RBA will have to hike sharply to make a dent in inflation, which is running at 5.1%. We'll get a look at CPI for the second quarter at the end of July. AUD/USD is putting pressure on resistance at 0.6782. Next, there is resistance at 0.6839 There is support at 0.6706 and 0.6649
by OANDA
Aussie slammed after RBA hikeThe Australian dollar is sharply lower on Tuesday. In the European session, AUD/USD is trading at 0.6796, down 1.0% on the day. The RBA delivered a 0.50% rate hike for a second straight month, bringing the cash rate to 1.35%. The central bank has now hiked by 1.25% since May, marking the fastest series of moves since 1994. This aggressive stance didn't do anything for the volatile Australian dollar, which has plunged over 1% today. There had been some uncertainty as to whether the RBA would hike by 0.25% or 0.50%. However, when Governor Lowe warned that inflation could hit 7% by the end of the year, the markets priced in a 0.50% move. The Australian dollar's sharp fall is surprising, as I would have expected the 0.50% hike to provide the currency with a short-lived jump. The Aussie's woes appear to be part of a risk-off move in the currency markets, with the US dollar posting broad gains today. The RBA's 0.50% hike is a vote of confidence in the Australian economy by the RBA, as Lowe is betting that the economy is resilient enough to withstand a sharp increase in rates. Employment is at a low rate of 3.9%, job vacancies are at record highs and consumer demand remains robust. The housing sector has been hit by higher borrowing costs, which will likely dampen household spending in the coming months. Lowe has admitted that there is a "narrow path" between tightening enough to curb inflation or being too aggressive and causing a recession. Attention will now shift to the Australian inflation report for Q1, which will be released in the last week of July. Inflation is expected to continue to accelerate, with a peak in inflation remaining elusive. The markets have priced in another 0.50% hike in August and expect the cash rate to hit 3% or even higher by the end of 2022. AUD/USD is testing support at 0.6849, followed by support at 0.6732 There is resistance at 0.6933 and 0.7050
by OANDA
1
Aussie eyes RBA minutesIt was a roller-coaster week for the Australian dollar, with much of the volatility driven by central bank rate moves. AUD/USD ended the week with a huge decline of 1.62% but has started the week in positive territory. Last week's releases indicate that the labour market remains robust and that inflation expectations are accelerating. Australia's employment report for May, released on Thursday, indicated that the labor market remains strong. The economy created 60.6 thousand jobs, crushing the estimate of 25.0 thousand (4.0 thousand prior). The unemployment rate remained unchanged at 3.9%. On the inflation front, inflation expectations rose sharply to 6.7% in June, up from 5.0% in May. Will RBA reveal its hand in the minutes? The RBA is undoubtedly carefully monitoring employment and inflation data, and both of these releases lend support for the central bank to continue raising rates - the employment market is strong enough to handle tighter policy, while the spectre of unanchored inflation expectations is a red flag that the RBA cannot ignore. Policy makers are willing to take the risk that higher rates could tip the economy into recession if that is the price to pay for lower inflation, which is seen as a huge danger to the economy. The RBA will be in the spotlight on Tuesday, with the release of the minutes from the meeting earlier in June. At that meeting, the RBA shocked the markets with a rate increase of 0.50%, bringing the cash rate to 0.85%. Most analysts had expected a 0.25% hike. Even with the super-size hike, the RBA has some catching up to do, with a cash rate still below 1.0%. The markets will be hoped to glean some insights from the minutes as to the direction of RBA rate policy. Any signals that the RBA plans to hike again by 0.50% should result in gains for the Australian dollar. AUD/USD is testing resistance at 0.6952. Above, there is resistance at 0.7052 There is support at 0.6834 and 0.6734
by OANDA
Aussie sinks as risk sentiment slidesThe week ended with a disappointing US inflation report. Headline inflation in May rose to 8.6% YoY, up from 8.3% in April. Core inflation eased to 6.0%, down from 6.2%, but that was little comfort for the markets, which are showing signs of panic over entrenched inflation. The result was that risk appetite fell, sending the US dollar surging against the major currencies. With no sign of an inflation peak, it's clear that the Federal Reserve will have to keep its foot pressed to the floor when it comes to upcoming rate hikes. This makes it likely that the Fed will deliver 50-bp hikes in June, July and September. Just a couple of weeks ago the Fed signalled it would take a break in September, but that now seems a luxury it can't afford, given that inflation hasn't eased. There have been calls for the Fed to deliver a massive 75-bps salvo at Wednesday's meeting, but such a shock move seems unlikely, especially in the current turbulent economic environment. If Fed Chair Powell is looking to send a hawkish message to the markets, he could hint at the meeting press conference that a 75-bp increase is on the table if inflation doesn't ease. Such a warning would likely boost the US dollar. There are some key releases out of Australia this week, kicking off with NAB Business Confidence on Tuesday. The indicator slowed to 10 points in May, down from 16 in April. If the downtrend continues, the Australian dollar could continue to lose ground. This will be followed by Westpac Consumer Sentiment on Wednesday and the May employment report on Thursday. AUD/USD is testing support at 0.6973, followed by support at 0.6902 There is resistance at 0.7181 and 0.7110
by OANDA
1
NZ dollar steady after solid jobs reportThe New Zealand dollar is in positive territory on Wednesday, as the currency looks for its first winning session since April 20th. The New Zealand labour market remains robust, as confirmed by the Q1 employment report. The unemployment rate remained at a record low of 3.2%, matching expectations. Employment growth fell to 2.9%, (3.1% exp.), which was down from the 3.5% gain in Q1. What was perhaps more significant was wage growth, which climbed to 3.1% YoY, its highest level since 2008. The RBNZ places great weight on wage growth and this upswing will raise pressure on the central bank to deliver another 0.50% rate hike at the May 25th meeting, which would bring the Official Cash Rate to 2.0%. Inflation hit 6.9% in the first quarter and the RBNZ is determined to curb inflation expectations, which like CPI, continues to accelerate. The RBNZ delivered a 0.50% in April and has telegraphed the markets that more tightening is needed. Despite the RBNZ's hawkish stance, the New Zealand dollar has been steamrolled by its US cousin. NZD/USD plunged 6.88% in the month of April, even with the 0.50% rate hike in April. The Fed holds its policy meeting later today, with a 0.50% rate increase a virtual certainty. Such a move will be highly significant, as it would mark the Fed's largest rate increase in 20 years and demonstrates that the Fed is committed to reducing inflation, which has hit 40-year highs. The half-point increase has been priced in, but what remains uncertain is the tone of the rate statement and how aggressively will the Fed scale back its balance sheet (quantitative tightening). If the Fed delivers a hawkish message to the markets in addition to the rate hike, the US dollar will likely respond with gains. There is support at 0.6391 and 0.6325 We find resistance at 0.6519 and 0.6585
by OANDA
Australian dollar falls on US retail salesAustralia's employment report was respectable, and the Australian dollar's reaction was muted. The economy created 17.9 thousand new jobs in March, down from 77.4 prior and shy of the estimate of 40.0 thousand.  The unemployment rate remained at a sizzling 4.0%, the lowest since 2008. Today's numbers are unlikely to shed much light on the timeline for the RBA's expected rate hike. The Bank stayed on the sidelines at the April meeting, but the change in language in the rate statement was enough to convince the markets that a rate-hike cycle is imminent. Inflation is soaring, and the strong economic fundamentals indicate that the economy can handle a series of rate hikes. What is standing in the way of a May hike is the Australian general election on May 21st. The RBA will be reluctant to make a move in the middle of an election campaign, although the record books indicate that the central bank did raise rates in November 2007 in the midst of an election. The Australian dollar fell early in the North American session, after the release of US March retail sales. The US dollar has posted broad gains, as investors were relieved that the retail sales were within expectations, despite soaring inflation. Core retail sales actually beat the consensus of 1.0% MoM, with a gain of 1.1%. This was up nicely from 0.6% in February. The headline figure came in at 0.6% (0.8% prior). This was just shy of the 0.5% estimate. The US dollar also received some help from Preliminary UoM Consumer Sentiment, which improved to 65.7 in April, up sharply from 59.4 in March. The Expectations Index surged, pointing to renewed consumer confidence. AUD/USD faces resistance at 0.7605 and 0.7750 There is support at 0.7371 and 0.7282
by OANDA
What 3 events will traders be watching this week? 31 Jan- 05 FebThis week’s 3 events will concentrate on US employment numbers. The released figures could bolster or work against the strength found in the USD since the beginning of the year. For instance, the NZD and EUR have quickly dropped in value against the USD and are currently at a multi-month low against the greenback. Depending on this week’s numbers, the GBP, CAD, and AUD, which are presently floating close to 1-month lows, may soon be joining the NZD and EUR at values not seen since mid-2020. Wednesday and Thursday, February 02 and 03: Wednesday: Jolts Job DEC Thursday: ADP Employment Change JAN Two highly anticipated precursors to Friday’s Non-farm Payrolls report are released over Wednesday and Thursday this week. The first, the JOLTS Job Openings for December, is expected to remain close to record highs with 10.5 million jobs advertised across the US. Employers are seemingly experiencing difficulty holding onto their workforce, with job quits matching recorded highs and labour force participation struggles to budge from 40-year lows. While the JOLTS Job Openings report is limited in its impact on forex and stocks, it does help set the tone for the following two more appreciable job reports. The second, the ADP Employment Change for January, is estimated to report the lowest number of new jobs added to the US private sector since February 2021, with the consensus forecasting 200K. The typically slow start to the year, if forecasts are accurate, will sit in stark contrast to December’s (2021) 800K jobs, which shocked analysts who were expecting less than half this number at the end of last year. Saturday, February 05: Non-farm Payrolls JAN Non-farm Payrolls JAN is forecast to report 155K jobs added to the US economy in January, representing a marked slowdown in jobs growth, but in line with what has been seen with the past few months. Last month’s report for December 2021 delivered 199K jobs, while November 2021 reported 249K jobs. Disappointing Non-farm Payrolls may no longer have the same impact it once did, as investors appear content with the slowing job growth, and negative pressure on the USD typically fails to eventuate after such an event. While job growth is slowing, it should be noted that wage pressure is rising, which could be a good thing for US consumer spending and optimism for the US economy in general.
by BlackBull_Markets
EURUSD Non Farm Payroll Catalyst?Non-Farm Payroll numbers are due today, after a strong decline EURUSD has settled into a consolidation/bear flag formation. I've been watching for a breakout of this range for a while now and while the structure of the flag has changed, the overarching idea is the same - looking for a break below the range to continue the larger trend. Non-Farm Payroll tends to bring with it spikes of volatility and can often be the catalyst to begin a new trend or new leg of a trend, which is what we're watching out for today.
Short
by HayeTrading
25
Canadian dollar calm ahead of job reportsThe Canadian dollar is on a holding pattern ahead of key Canadian and US employment reports later today. Currently, USD/CAD is trading just above the 1.27 line. It could be an active North American session for the Canadian dollar, with the release of Canada's job creation numbers and the US nonfarm payrolls. Expectations are low for the Canadian data, with a forecast of just 27 thousand new jobs in December, after a robust gain of 153 thousand in November. There is plenty of anticipation around the nonfarm payroll release, however, especially after the monster ADP release earlier this week. The ADP gain of 807 thousand was double the consensus of 400 thousand, but historically, ADP has not been a reliable gauge of nonfarm payrolls. The forecast for NFP is around 425 thousand, and a release below 250 thousand or above 550 thousand could shake up the US dollar. Investors are starting to get nervous now that a Fed rate hike could be only a few months away, and the timeline for the first rate hike could be impacted by the strength of the nonfarm payroll release. A strong gain would strengthen the likelihood of a March hike, while a soft NFP could delay lift-off of a hike, which could lead to a rotation out of US dollars. In determining when to start hiking, policymakers will be looking not only at the strength of the recovery but also at inflationary pressures. The Fed has abandoned its view that inflation is 'transitory' and this week's FOMC minutes indicated that policymakers viewed inflation risks to the upside and are also concerned about the very tight job market. The minutes also stated that the Fed is considering scaling back its balance sheet as another brake on the economy. The markets took note, with 10-year bonds rising above 1.70% and CME FedWatch pegging the likelihood of a March hike above 70%. USD/CAD is testing resistance at 1.2784. Above, there is resistance at 1.2929 There are support levels at 1.2558 and 1.2477
by OANDA
BoE Ends The Year With A Hike! (20 December 2021)Surprise rate hike! The Bank of England (BoE) delivered an interest rate hike of 0.15% during their monetary policy announcement last Thursday. Out of the nine committee members, eight voted for a rate hike while one voted for rate to remain unchanged at the previous 0.10%. All nine members voted for no change of corporate bond purchases at £20 billion and UK government bond purchases at £875 billion, totaling £895 billion. With an almost unanimous decision to hike interest rate as opposed to the previous meeting whereby only two members voted for a rate hike, it seems like the committee members are downplaying the impact of the COVID Omicron variant despite the recent spike in Omicron cases in the UK. Reasons behind the hike The first motivating factor for the BoE to hike interest rate is the resilient job market. To the surprise of the central bank, there was no concrete evidence that the ending of the UK furlough scheme in September led to a weakening in the labour market. Instead, the latest data released by the Labour Force Survey indicated that unemployment rate has fallen to 4.2% in the three months to October and that 257,000 jobs were added into the economy in November, thus showing little impact from the exiting of the furlough scheme. Moreover, the central bank’s committee highlighted during the November’s meeting that if future employment data were to be in line with its projection, it will be necessary for rate hikes to take place in order to tone down inflation and maintain it at the BoE’s 2% target. And during the meeting last week, the central bank deemed that the condition has been met, thus an interest rate hike is warranted. Another motivating factor for the rate hike is the recent strong inflation that has caught the attention of the UK Finance minister, leading to the exchange of open letters between him and BoE Governor Bailey. In November, prices in the UK rose to a 10-year high level of 5.1% and is expected to remain around the same level throughout the winter period and peak around 6% in next April. Being the first G7 central bank to carry out an interest rate hike, we can certainly expect the next hike to come as soon as February 2022 since inflation is on the way to triple the central bank’s 2% target.
by GH_Lee
1