14/06/2017 AUD/USD AnalysisA high positive change in the number of people employed in Australia, push the AUD upwards, keeping a continuation in the upward trend that maintains for several days. www.investing.com
Employment
Gold Pushes Up Against a Potential Triple TopGold started the day with a big selloff but then recovered after the FOMC and Janet Yellen announced that they would not be raising interest rates at this time. Gold is now attempting to break out of a potential triple top at $1220. If Gold can break through, then the first target would be 1241.7, the .618 fib extention from the bull run that started at the end of last year. With jobless claims tomorrow at 8:30 am EST and Non Farm Payroll on Friday at 8:30 am EST, there can be some potential big moves coming up for the precious metal.
The main chart today is complete with all the indicators that I use. The first chart below is the same but with Japanese Candlesticks, called Heiken Ashi. They are really good for showing trends. As you can see, we are now into day 3 of this uptrend.
On this next chart, I've removed most of the chart objects to show only the basic Bollinger Band and Moving Averages. It's clear to see that price has separated from the 6 and 8 day moving averages and has ridden the mid line of the Bollinger Band higher.
Feel free to ask any questions or leave comments. I am always interested in having thoughtful discussions on price action to improve all our trading.
Aussie Sell-OffDisappointing employment change in Australia and a dollar rally will provide selling pressure on the Aussie Dollar pair to the 0.7500 level
LONG USDJPY: ANOTHER BOJ OUTPERFORM CASE - 28TRN GOVT STIMULUSAnother argument for the BOJ outperform case - Post BOJ Buy $Yen @MRKT 111tp:
1. We know BOJ and JPY Govt Abe/ Aso have had many meetings post-brexit and as it follows the JPY Govt have announced today that they will deliver a fiscal stimulus package of 28trn - which was to the very right of the curve (10-30 was talked about).
- This in mind, imo it is rational to extrapolate that 1) surely if the JPY govt are choosing a tail end stimulus package (aggressive), BOJ will be inclined to do also? Given that it is the BOJ remit for economic targets like inflation, not the governments - BOJ wouldnt want to be seen as dropping the egg would they e.g. govt does as much as it can but BOJ only midly eases - doesnt make sense? Especially given the relationship between kuroda/ aso/ abe it would almost be impossible.
- 2) The BOJ will know/ see that the JPY Govt are taking the "extreme" side of measures, so once again this puts the BOJ under-pressure to do the same as they dont want to be seen as "letting the side down" especially as it is the BOJ who really has the power to change things - the Fiscal package is rather an indicative/ nice gesture of the govts willingness to help - rather than any real hard easing when you consider the Govt package is likely to be 28trn a year but the BOJ purchases/ injects 80trn A MONTH to its monetary based in JGBs - thats 960trn a year. So 27trn govt vs 960trn BOJ - is the govt really making an impact or are they instead signalling their commitment/ putting pressure on the BOJ? I think so.
Under-performance case:
1. Perhaps less meaty, but nonetheless a valid point - Japan, JPY Govt and BOJ have lived with low inflation/ deflation for the past several decades and no "extreme" action has been taken to resolve it (well not enough to fix the problem anyway) so this pressure on the BOJ we talk about above - is it real? or is it a theoretical pressure that they "Must" hit their targets?
- If history predicts the future then yes, it is a theoretical economic pressure - they haven't hit the target for 20yrs so why would they do measures to hit it now? There's no public pressure, im sure theyre happy consuming at lower prices - unlike with high unemployment.
- Off topic but it would be interesting to see a Japan with high Unemployment - an economic indicator that causes civil unrest (Greece riots) and is a necessity to be solved for the wellbeing of any nation - thus my bets are if unemployment was at 15-20% (similar comparison to deflation) for the past 15yrs something drastic WOULD have been done a long time ago, or be done on Friday to fix it. After all, theres no driver to fix something that doesnt really need fixing is there? Think about the last time you went to extreme measures to fix something that wasn't much of an issue...
DATA VIEW (NOT A FORECAST): PART-TIME EMPLOYMENT STILL HIGHPart-time employment is also declining within its well defined trend since 2012, however it has still some progress to make before reaching pre-crisis levels.
In fact, it is the only systemic fallout left to be erased from the 2008-2009 crisis in the employment data.
DATA VIEW (NOT A FORECAST): LONG TERM UNEMPLOYMENT CLOSE TO NORMLong term (27-WEEK AND OVER) unemployment is also well within the declining trend and it has almost reached pre- 2008/9 crisis level, confirming the positive data in unemployment and total payroll charts.
Current levels are also highs of previous recession, thus everything below current levels can be considered normal, if the data holds descending trend.
Gold: Triangle still unresolved; Entry levels refinedThe US employment report was mixed. Payrolls posted a 215,000 jobs gain, around June's level, while analysts had expected 225,000. The previous number was upwardly revised to 231,000. The unemployment rate remained at 5.3%, while wage growth came out at 2.1% year-on-year, up from 2.0% in the previous month. According to a latest Reuters poll, the median probability for septermber rate hike estimated by US primary dealers is 60% vs 55% in June. The number for December meeting stands at 80%. 9 of 19 dealers expect two rate hikes this year.
The short-term reaction has been very volatile, with violent swings in both directions. The price of Gold has tested both trendlines that form the Triangle pattern. There is a clear 5-wave advance that usually sets a new uptrend. The key support cluster is projected @1089. Our approach is to wait for a 4-hour candle to close either above 1099 to generate a buy signal; or below 1082 for a sell signal. While the intraday chart to the right suggests higher prices based on last swing's wave structure, the long-term trend is, obviously, down.
GBP/USD Accelerates higher on weak ADP reportEmployment in the US private sector disappointed last month, shattering hopes that the Fed will raise interest rates in September. The number of employees increased by 185,000 in July compared to the 229,000 booked in June, according to ADP. On Friday, the non-farm payroll report will provide further hints of labor market development, with analysts expecting a gain of 220,000 people added to the workforce, while the unemployment rate should stay intact at 5.3%.
The news spurred US Dollar sell-off with GBPUSD trading near session highs at 1.5646. Technically, there is an Inverse Head&Shoulders pattern developing. Its right shoulder took the form of a 'bear trap', which adds to British Pound strength.
Please, mind the heavy event risk on Thursday. The Bank of England meeting will be closely watched following a series of comments from MPC members, including Governor Carney, that the first rate hike since the crisis is moving closer. In conjunction with Thursday’s interest rate decision, for the first time we also have the simultaneous release of the MPC meeting minutes and August Quarterly Inflation Report, followed by a press conference. This deluge of information flow has been dubbed 'Super Thursday' among analysts.
Gold: Triangle Thrust UpdateAn update to our previous idea (see link below). An unexpectedly disappointing gauge of employment costs in the US brought strong bearish pressure on USD, shooting the EUR/USD well above the $1.10 level, as well as lifting Gold price up to $1100 handle. No trendline break in XAUUSD yet.
The Employment Cost Index showed the lowest increase in workers' pay since 1982, spurring general disappointment. As the market remains strongly sensitive to the labor market and inflation worries related to wages, such indices are still monitored due to possible Federal Reserve tightening steps in September. Wages, making up approximately 70% of this index, rose 2.1% over the year in June, lower than the post-recession high of 2.6% at the beginning of the year. The gain in wages and benefits during the second quarter was the weakest since 1981, growing only 0.1%.
