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Dean's Daily FX Update – 04 July 2017
In the Zone
- All
Noteworthy News
- President Trump tweeted about strong job growth, he tweeted something similar in mid-June about GDP and we got a better than expected growth reading last week. The market will start speculating now if we can expect a strong NFP number on Friday.
Recap
If anyone had any doubts over how quiet the market would be yesterday, I think those would have been put to bed. The market almost come to a standstill around 17:00, Canada were enjoying the day off and US traders left early to celebrate Independence Day. If you thought yesterday was really slow, I can assure you that this afternoon may be even worse and it is usually a good day to work on back testing and fine tune your strategy.
The dollar staged a bit of a comeback yesterday as it ate into the recent gains of the major pairs, I suspect that a lot of yesterday’s move may be eroded today though as traders look to take a little profit and also there are essentially no dollar traders in the market to cap the move. This means that I would be hesitant to trust the technical indicators today and will instead focus on the fundamentals ahead of a busy economic calendar for the dollar.
We have seen overnight that North Korea have ordered a test of intercontinental ballistic missiles which went off successfully, North Korea now believe that they have capacity to hit anywhere in the world – the fact that this went off on US independence day cannot be a coincidence. Either way this may mean that we go into a bit of a risk off environment and this may buoy the JPY and possibly the dollar tomorrow.
The RBA left rates on hold this morning, although this was as expected, the market were eagerly waiting for the tone of the message to see if Australia had gone the more hawkish route of other Central Banks of late. The RBA was more realistic and tried to reiterate that they are no closer to raising interest rates, this was the catalyst for the AUDUSD to trade lower by around 70 pips this morning. There will likely be the inevitable bounce this morning and it’s a pity that this come on a US holiday as there may be little momentum behind this move, either way this may also affect the NZDUSD as the market will start to lump the Kiwis in the same boat.
I continue to see divergence on all the daily charts in the major pairs, roll on Wednesday so that the week can start in earnest.
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