USD Remains Soft After Big NFP Miss

Oct 11 21, 08:50 GMT

The USD was soft against a number of its counterparts on Friday and during today’s Asian session, after a big miss on September’s NFP figure, which was released on Friday. On the other hand, it should be noted that the unemployment rate ticked down and average earnings growth rate accelerated which could have prevented the bears from totally taking over. On the other hand, the Loonie strengthened considerably against the USD as Canada’s employment data for the same month outperformed market expectations and highlighted the contrast in the situation of the two. However, the Loonie may have enjoyed additional support as WTI prices were on the rise surpassing $80 per barrel, a level not seen since 2014 caused by increased demand while it should be noted that natural gas prices were also on the rise. Safe haven Yen weakened on Friday and today’s early morning, given that despite the soft US employment data for September, market expectations for a possible announcement for a tapering of the Fed’s QE program seemed to remain unchanged thus prompted US yields to rise. Rising US yields on the other hand also tended to victimize the Tech sector in the US stockmarkets as Nasdaq dropped, while may also have prevented Gold bulls from taking considerable action after the release of the US employment report. Overall, we see the market being driven by fundamentals today given the low number of high impact financial releases, while trader’s attention may have started to shift towards the release of the Fed’s last meeting minutes and the US CPI rates for September, both due out on Wednesday.

USD/JPY rose breaking the 112.25 (S1) resistance line now turned to support. We tend to remain bullish for the pair, yet the RSI indicator below our 4-hour chart is above the reading of 70 confirming the bull’s dominance yet may imply that the pair is overbought and may correct lower. Should the bulls maintain control over the pair, we may see it breaking the 112.90 (R1) resistance line thus paving the way 113.70 (R2) level. On the other hand, should the bears take over we may see the pair reversing course, breaking the 112.25 (S1) support line and aim for the 110.90 (S2) level.

USD/CAD dropped on Friday dropped breaking the 1.2500 (R1) support line, now turned to resistance. We maintain our bearish outlook for the pair, yet we highlight that the RSI indicator below our 4-hour chart has dropped below the reading of 30 implying that the pair may have reached oversold levels and a correction higher is possible. Should the selling interest be extended, we may see the pair breaking the 1.2425 (S2) support line and aim for the 1.2330 (S1) support level. Should a correction higher take place we may see the pair breaking the 1.2500 (R1) line and aim for the 1.2580 (R2) resistance level.

Today’s events and expectations

Today during the European session, we get the CPI rates for September from the Czech Republic and Norway.

As for the rest of the week

On Tuesday, we get Japan’s Corporate Goods price growth rate for September, UK’s employment data for August, and Germany’s ZEW indicators for October. On Wednesday we get China’s trade data for September, UKs’ GDP and manufacturing output rates for August, Eurozone’s industrial production rate for August and most importantly the US CPI rates for September, while later the Fed is expected to release the minutes of its September meeting. On Thursday, we get Australia’s employment data for September, China’s and Sweden’s inflation rates for September the US weekly initial jobless claims figure and Canada’s manufacturing Sales growth rate for August. On Friday we note the release of France’s final HICP rates for September, and from the US we get the NY Fed manufacturing index for October, the Retail sales for September and the preliminary University of Michigan consumer sentiment for October.

USD/JPY H4 Chart