Morning forex briefing
The USD is trading very quietly ahead of closely-watched fundamentals this morning; overnight action was also very quiet.
Traders note that with the Japanese holiday volumes have been extremely light and order flows have been patchy. Cable had a bit of a volatile session after the release of stronger than expected UK CIPS data inspired traders to buy cable but the rate has since corrected back to opening levels and now to start New York is about unchanged from Thursdays’ closing levels.
EURO flat but near the highs again, pair traded in a narrow 10-pip range for most of the evening suggesting that traders would rather watch paint dry than their screens.
USD/JPY had virtually no action due to the holiday in Japan but still managed a slight boost higher due to cross-spreaders looking to lighten up ahead of US data.
Across the board the pairs are waiting for the release of US data this morning; traders expect a volatile session if NFP numbers are significantly different than forecasts. Analysts have a median forecast of +125K gain in NFP and a steady employment number at 4.6%; most feel that the as-expected number is already factored in to USD pricing so it would most likely be a case of “buy the rumor/sell the fact†for this mornings trade. Anything substantially different would likely cause a lot of volatility but for the day the USD will likely finish a bit higher due to position squaring and short-covering. In my view, the USD is looking for higher prices and should the NFP help that today the USD will rally into the London fix. Look for a positive day for the Greenback and a selling opportunity from that strength sometime next week.
GBP/USD Daily
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R3: ?
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R2: 1.9150/60
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R1: 1.9120/30
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Current Price : 1.9079
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S1: 1.9030/50
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S2: 1.8980
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S3: 1.8920/30
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Rate holding near highs overnight in extremely light volume ahead of US NFP data. Traders remind that offers are thick ahead of the 2006 highs but also remind that volatility might be high. Stops said to be building close in under the 1.9030/50 area and if triggered could ignite a long-liquidation break. Target is 1.8800 for a retracement should the pair fail at these highs near-term.
USD/JPY Daily
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R3: 118.20
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R2: 117.80
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R1: 117.40
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Current Price : 117.16
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S1: 116.80
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S2: 116.60
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S3: 116.20
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Pair consolidating nicely for a potential correction higher; support holding on dips suggesting that the USD bears will have to cover and place offers higher if they are wrong-footed from the 117.60 area. Stops under 116.50 area said to be getting thick but also stops above the 117.80 area also building. Today’s US data may ignite volatility so be prepared for a large move if stops are triggered.
Please see www. ProEdgeFX.com for details
Jason Alan Jankovsky
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