The greenback had substantial gains against many of its counterparts on Friday as the June Non Farm Payrolls exceeded consensus expectations. The NFP figure rose to 224k exceeding consensus of 160k, while on the flip side, Average earnings remained unchanged at +3.1% yoy, and unemployment ticked up reaching 3.7%. It was characteristic that the strong rise of the NFP figure overshadowed the tick up of the unemployment rate providing support for the USD. Despite analysts already discussing a possible shift of the Fed’s stance towards remaining on hold, instead the market’s priced in rate cut of 25 bp, we expect that such a discussion may be premature, as the Fed may be interested in the broader picture. We could see the USD gaining in the aftermath of the release and should there be Fed officials start showing more confidence we could see the USD strengthening even further. EUR/USD dropped on Friday breaking the 1.1260 (R1) support line (now turned to resistance), yet seems to be finding considerable support at the 1.1220 (S1) support line. We could see the pair dropping even further should the USD strengthen even further, yet it should be noted that in the 4 hour chart the RSI indicator is at the reading of 30, implying a rather overcrowded short position. Should the bears dictate the pair’s direction once again, we could see it breaking the 1.1220 (S1) support line and aim for the 1.1180 (S2) support level. Should the bulls take over, we could see the pair aiming if not breaking the 1.1260 (R1) resistance line.
WTI prices rise as OPEC output hits new low
OPEC output hit a new five-year low in June as media reported on Friday. Analysts seems to be sighting that Saudi supply was not able to offset losses in Iran and Venezuela due to US sanctions. A Reuters report suggested that the Saudis, despite raising production are still pumping less than he OPEC deal allows it. On the flip side, Iran’s Oil minister stated that he was very hopeful of an improvement in the country’s oil exports, despite tightening US sanctions. Should headlines about reduced production continue to reel in, we could see oil prices rising even further. WTI prices rose on Friday testing the 57.70 (R1) resistance line, however were unable to clearly break above it. We could see bullish pressures continuing to influence the commodity’s direction, especially should there be further headlines about tight production levels. Should the commodity find fresh buying orders along its path, we could see it breaking the 57.70 (R1) resistance line and aim for the 59.50 (R2) resistance hurdle. Should it come under the selling interest of the market, we could see it aiming if not breaking the 56.00 (S1) support line.
Other economic highlights, today and early tomorrow
Today during the European session, we get Germany’s Industrial output growth rate and trade balance, both for May.
As for the rest of the week:
On Tuesday, no major financial releases are expected. On Wednesday, we get China’s CPI and PPI rates for June, UK’s GDP for May, from Canada BoC’s interest rate decision, and from the US the FOMC meeting minutes. On Thursday, we get from Germany and France the final HICP rate for June, ECB’s account of the last monetary policy and from the US the core and headline CPI rates for June. On Friday, we get from China’s trade data for June, Eurozone’s industrial production for May and the US PPI rate for June.
EUR/USD
Support: 1.1220 (S1), 1.1180 (S2), 1.1125 (S3)
Resistance: 1.1260 (R1), 1.1300 (R2), 1.1340 (R3)
WTI H4
Support: 56.00 (S1), 54.50 (S2), 52.90 (S3)
Resistance: 57.70 (R1), 59.50 (R2), 61.00 (R3)
