The US$ has retreated from its 3 week highs on Wednesday after some soft manufacturing data (Chicago Purchasing Managers Index, 51.5 vs exp 54 ) dented trader’s optimism about U.S. economic growth ahead of the US employment report on Friday. Prior to this though, the dollar had been well underpinned by the strong ADP employment figure (+194K vs exp 179K), giving traders hope of a solid NFP figure tomorrow. Oil is sharply lower due to increased US inventories, which in turn dragged the US stock markets down.
Thursday will see the release of the global Manufacturing PMIs beginning with Australia and China. That aside, NZ will kick things off with the Q2 Terms of Trade (exp -1.4%) to be followed by the Australian Retail Sales (exp +0.3%) and Q2 Private Capital Expenditure (-4.2%). There is little else due from the EU aside from the PMIs but from the US we can expect weekly jobless claims, construction spending (July; exp +0.5%), the ISM Prices Paid (exp 55) and also the ISM Manufacturing PMI (Exp 52.1).
EURUSD: 1.1155
The EUR/USD is a little firmer against the dollar, after some mixed US data left the picture somewhat confused, ahead of tomorrow’s US employment data. It has been a tight 40 point range and it may well be that we have a similar story again today although the upcoming manufacturing PMIs may change that theory. The 4 hour momentum indicators are now a little more positive although the dailies are still pointing lower, so trading from the short side and selling into strength is still preferred. It may be rangebound and liquidity will begin to thin out a little ahead of Friday’s jobs data but the signs do point to a lower Euro.
24 Hour Bias: Neutral
Medium Term Bias: Mildly Bearish
Economic data highlights will include:
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EU Manufacturing PMIs, US Markit/Ism Manufacturing PMIs, ISM Prices Paid, Construction Spending, Total Vehicle Sales
USDJPY: 103.45
24 Hour Bias: Neutral
Medium Term Bias: Mildly bullish
USD/JPY was again the centre of attraction on Wednesday, in making a new 1 month high after the release of the strong ADP figure, although it has since been capped after the rather weak Chicago Purchasing Managers Index as traders look towards the result of Friday’s NFP. In the short term, the 4 hour/daily momentum indicators look positive although they are now becoming overbought but the dailies still point higher so we could yet be on our way towards 104.00+. Note that the hourlies are also becoming overbought and showing some bearish divergence so I would wait for a bit of a dip before jumping in to buy dollars.
Economic data highlights will include:
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Foreign Bond/Stocks Investment, Nikkei Mfg PMI
GBPUSD: 1.3135
24 Hour Bias: Neutral
Medium Term Bias: Neutral
Cable is a little higher today, assisted by the mixed US data and in the short term the momentum indicators are offering little hint in either direction suggesting that the choppy price action will continue. In the bigger picture the triangle formation still dominates the action, and with the daily charts looking rather flat it could be another session of trade close to 1.3100. The global PMIs, including the UK Mfg PMI will be the driver today.
Economic data highlights will include:
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UK Manufacturing PMI
USDCHF: 0.9835
24 Hour Bias: Neutral
Medium Term Bias: Mildly Bullish
had another positive session, reaching a new trend high of 0.9862 before running out of steam and returning to the 200 DMA which has again slowed the upward momentum. The daily momentum indicators are still pointing higher, so trading from the long side and buying dips is again preferred although the 4 hour charts do appear to be running out of some steam and we may see better levels during the session in which to do so. Ahead of Friday’s jobs data a rangebound session would not surprise.
Economic data highlights will include:
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n/a
AUDUSD: 0.7515
24 Hour Bias: Prefer to sell rallies
Medium Term Bias: Mildly Bearish
The AUD/USD broke below 0.7500, as the US$ took on a bid tone, reaching 0.7490 after the upbeat ADP data but it has since regained some of its earlier losses to sit pretty much unchanged on the day. While the dailies remain negative, trading from the short side and selling into strength is still preferred although the 4 hour charts do appear to be trying to turn a little higher. A break of 0.7490 would find minor support at 0.7475/80, and below there, at 0.7450. Rallies should now be limited to 0.7550/60 although the direction today will largely be dictated by the PMIs and also by the Q2 CAPEX.
Economic data highlights will include:
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AIG Manufacturing PMI, Retail Sales, Private Capital Expenditure (Q2), China Official/Caixin Mfg, Non-Mfg PMIs
NZDUSD: 0.7250
24 Hour Bias: Prefer to sell rallies
Medium Term Bias: Mildly Bearish
The Kiwi has had a choppy session, squeezing a little higher, to reach 0.7265 before drifting a little lower. We may have a sideways session ahead although as we said before, the daily charts have been showing an increasing sign of bearish divergence which, after stopping out plenty of shorts when making a new trend high last Friday, may now add credence to the prospect of further downside momentum in the days ahead. A break of 0.7200 is expected eventually, looking for a run towards 0.7165 and lower. Stops on shorts should be placed above 0.7300.
Economic data highlights will include:
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Terms of Trade (Q2)
Originally published by AxiTrader