Morning forex briefing
After a quiet two-sided session
overnight, the USD is trading mixed at the start of New York trade and very
quiet ahead of today’s closely watched NFP data. Traders are
suggesting a bout of USD volatility during the report so for those not
currently in a position, give the markets about 45 minutes to settle down
before executing; limit orders are suggested for aggressive traders. Asia saw
the USD lose ground against the Yen early, trader’s note that volumes remained
light as expected but a large US bank was seen on the offer to take the rate
down to the overnight low at 117.09.
Currently in New York USD/JPY is trading 117.25 and the
double-top at 117.50 area remains intake; offers layered above with light
stops as well. Traders expect the pair to cap on a rally around the 117.80
area with a lot of selling interest above there to 118.20. Against the EURO
overnight, the USD has had a very narrow range heading into US trade. Analysts
suggest that yesterday’s lack of an ECB rate hike is keeping a bit of pressure
on the rate but EURO bulls note that the pair is holding technical support at
1.2780 very well on light volume suggesting that the pair is not attracting
sellers and the buyers are sitting tight. Traders look for the 1.2880 area to
draw selling interest again today with a close under 1.2800 looking like a
near-term top.
Cable has been buoyant overnight drawing bids from several
areas traders say; cross-spreading is evident for Yen even on a light volume
pre-report day. GBP expected to see resistance at the 1.9090 area again on a
rally with support very firm at 1.8880 area. Cable could be in a developing
trading range that is quite narrow for this pair but analysts see more upside
after a reasonable correction. In my view, the US data today will most likely
determine near-term sentiment for the USD because traders are leaning toward a
continued Fed Pause in the rate hike cycle; the new “data dependant†Fed will
have one full cycle of US data to digest heading into the September FOMC
meeting. Today’s NFP is a large peeve of the puzzle in my view because if job
creation continues to moderate and inflation is under control; the argument
for the Fed overshooting on the rate picture is a good one and the fed’s next
move will be nothing before cutting rates again. Weak payroll data could
ignite a USD break so run protective stops on your Short Majors positions!
USD/JPY
R3: 118.20
R2: 117.80
R1: 117.50
Current Price : 117.26
S1: 117.00
S2: 116.60
S3: 116.20
Pair consolidating at the resistance zone, cross-spreading
with EURO and GBP lending support to the USD by default, once that pressure
comes off—