The USD is up so far today on expectations that NFPs will come in at 210K jobs added to the economy. The unemployment rate is also expected to tick down to 6.6% from 6.7%. We believe that we should see a fairly good print although 1Q GDP was very weak that does not speak for the labor market overall, not to mention other data was not as bad. The labor market is no longer under pressure from the weather and hiring should have picked up.
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Previous NFP numbers, averages, standard deviations and my expectations
All eyes on US NFPs today 210K is expected while forecast vary from 180K to 220K.
Anything below 200K could see a pretty negative USD reaction.
GBP/AUD still looks like it could continue lower. The doji candle shows some market indecision. And although it did rise yesterday we still have the 0.382 fib level around 1.83 to contend with. We should know more after tomorrow if it makes sense to hold onto this trade or exit for a loss.
We continue to hold a small short.
AUD/USD looks like it may be finding trend line support. However with the weak data we have seen out of Australia and the dovish RBA who would like to see the currency depreciate it is best to stay on the sidelines for now.
For now we are flat.
GBP/USD is currently trading near highs for the day, we are looking at a possible trend continuation on the back of some GDP data. However, the failure to close above 1.69 shows that some sellers are watching this pair closely. That being said we could continue lower tomorrow if the market is impressed with US data
For now we are holding a small short.
NZD/USD is currently trading near highs for the day (7:34 GMT), NZD/USD has been able to rebound lately but may slow as it is still capped by a downward RSI trend. Major support is market by the long term 0.236 fib at around 0.85 with strong resistance coming in around the 2013 high and YTD highs. Look for a bullish RSI break for possible NZD/USD continuation higher.
For now we are holding a small short.
Tomorrow all eyes are on USD/JPY if data is weak it could dip below 102 but may be unable to stay there, depends how the market feels. If data is good we could see 103 by the end of the day. In the long term USD/JPY should continue to move up.
USD/JPY has not moved a lot for the last 3 months but that may change soon, RSI is in a slow but steady upward trend and the triangle pattern is pointing towards continuation. This pair is really locked in consolidation for the time being because even though the Bank Of Japan is not considering adding any additional QE anytime soon the US is tapering which is adding some strength to the USD. Plus while the markets are in a risk on theme the JPY should stay weak.
We are holding long.
USD is facing some resistance near term, reaction low resistance and down trend resistance may prevent further USD strength for the time being. USD could possibly break out of this trend heading into May if the market likes NFPs this Friday and volatility picks up, which is currently near all time lows. Expectations are very high for the USD and this is leaving us with a cautious outlook for the time being.
Gold has dropped back below $1300 and could face a new wave of selling. Gold is currently trading around $1283 (4:17 GMT).
SPX500 has failed to fall much further as market sentiment is currently very bullish, we could possible see new all time highs this week. If we are unable to press above all time highs there is a risk of steeper declines.
I have added an overlay of Gold to the SPX500 to prove a point that the two are not always inversely correlated. Last month Gold has been pretty correlated vs the SPX500, maybe on possible bubble or market top fears but has dropped off recently…