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Dean's Daily FX Update – 02 June 2017
In the Zone
- EURUSD
- AUDUSD
- USDJPY
Noteworthy News
- The US withdrew from the Paris Climate Accord this morning, this will lift the handbrake on business, especially manufacturing in the US. I would not be surprised if we see a wall of cash find a new home in the US equity market.
Recap
The day before the NFP release is usually a quiet day as the market starts bracing for the report, I have mentioned before that the employment market must be getting close to full capacity, but judging by the ADP private sector report yesterday we could be bracing for another strong NFP today. The manufacturing was good, the economic data continues to be strong in the US and the market will continue to interpret this as an interest rate hike in June. The other news is that President Trump officially withdrew from the Paris Climate Change Accord yesterday – although he did suggest he was willing to renegotiate terms to re-enter. He effectively removed the hand brake for US business and I would not be surprised if we saw another day of buying on the US equities.
The EURUSD fell to the lows shortly after the US data was released, but it was noticeable that there was support at the 1.1200 area which has confluence with the 200 hour MA. It was just as noticeable to me that the high found a clear cap at 1.1235 yesterday, these two levels will be the range for this morning and I suspect that it will be the NFP report that allows the pair to break this range – in either direction.
The GBPUSD had an attempt to break above the 200 hour MA yesterday and traded above 1.2900, the high got to 1.2914 but like the EUR, this was where the gains were capped. From a technical perspective this remains a strong resistance level. The low in this pair seems to be 1.2840 but I am hesitant to trade this pair with the UK election a week away.
The USDCAD continues to be a frustrating pair to trade, the oil price allowed for the pair to test the lower prices at 1.3470 which is also the 200 hour MA. The pair found immediate support here and the pair closed closer to the May swing high at 1.3530, as long as price is above the 200 hour MA the buyers will be in control and I would not be surprised if they attempt to trade this as high as 1.3550 today.
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