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Dean's Daily FX Update – 01 September 2017
In the Zone
- AUDUSD
- USDCAD
- ALSI
- GOLD
- OIL
Noteworthy News
- The Brexit boxing gloves are back on with the UK insisting that the EU will not get the full obligation payment that they were expecting. This could get nasty again.
Recap
As much it tried, the dollar could just not hold onto the momentum that it started on Wednesday. The London session seemed as though it certainly was going to give it a good chance, but there was a late day slump in the dollar, much of the blame came from Mnuchin after his comments that a weaker dollar was better for trade – to be fair to him though, his comments were taken out of context.
After a strong ADP number on Wednesday, the market is bracing for a strong NFP print today but I suspect that there may be a little surprise as traditionally the September NFP is weak (17 of the last 20 years have been poor numbers. The obvious reason is that August is a holiday month in the US and so many people don’t respond including teachers. Regardless, the hurricane in Texas will cloud the landscape for the Fed and the chances of a rate hike in December have already diminished some – down to just 29% a bad reading today could send those odds lower still.
The USDCAD was the big mover yesterday as we saw a really strong GDP print out of Canada, the initial reaction for the USDCAD was to fall by over 100 pips. On closer inspection of the number it seemed even better than we first thought and so the pair strengthened even further and the pair closed almost 200 pips stronger. I suspect that we may get some buyers interested in this level today and I will be keeping a keen eye on this pair.
The EURUSD is at “make or break,” levels this morning, it did manage to break through major support at 1.1900 and eventually spent most the day testing back up to that level again last night. I will be interested to see if this pair fails to break higher, meaning that we have a change of polarity as support becomes resistance. There are rumours out of the ECB that some are starting to get concerned over the strong currency.
As usual the NFP data today should bring it usual drama with it, I have a funny suspicion that the dollar was pricing in a bad read yesterday, today could see a case of “buy the rumour, sell the fact today.”
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
10:30 GBP Manufacturing PMI
Consensus: 55.5
Effect: Actual higher than expected is good for the GBP
14:30 USD Average Hourly Earnings
Consensus: 0.2%
Effect: Actual higher than expected is good for the USD
14:30 USD Non-Farm Employment Change
Consensus: 180K
Effect: Actual higher than expected is good for the USD
14:30 USD Unemployment Rate
Consensus: 4.3%
Effect: Actual lower than expected is good for the USD
16:00 USD ISM Manufacturing PMI
Consensus: 56.5
Effect: Actual higher than expected is good for the USD
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