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For consecutive months the ADP employment rate showed enormous growth, almost doubling the expectation. Considering all the other data that we have seen come out of the US of late, this number does seem a little unbelievable – something just does not make sense. The FOMC minutes didn’t really give us anything either, the focus was on whether there were any clues as to when the Fed will start reducing the balance sheet. Once again the minutes showed the Fed to be a lacking cohesion, and if anything these minutes just cast fresh doubts and very little answers.
Dean's Daily FX Update – 06 April 2017
In the Zone
- EURUSD
- AUDUSD
- USDCAD
- USDJPY
- USDCHF
Noteworthy News
- President Trump spoke strongly on the gas attacks in Syria, he did not mention the need for military action but I think this is something to start monitoring.
Recap
Further headlines came out stating that the “phenomenal” new tax plan would take longer to achieve as congress could not get onto the same page. So US politics sits in a position where one party controls both the Senate and the House, and the there is no new healthcare act, no new tax plan, no border wall, no new immigration plan and a confused Fed. There is still the meeting with his Chinese counterpart this weekend to discuss supposed trade imbalances.
Despite all of this the dollar index still enjoyed a bumper ride today, this is where common sense doesn’t stack up for me. There is no real reason for traders to flock to the dollar and yet it seems to have become a daily routine.
The EURUSD remains in a very tight 50 pip range for the entire week, and we will probably only see a move of substance when the range breaks. This tight range is a perfect illustration of the confusion of both the Fed and the current dollar strength. The range sits at 1.0690 on the topside and 1.0630 on the lower end – this range will have to break before there is any trader interest.
The USDJPY is the only pair that make sense to me at the moment. The pair had a look higher on the back of the US employment report and was able to test above the 200 hour MA at 111.20, this was a pivotal level that buyers would have wanted to remain above to feel comfortable. It wasn’t long before resistance forced the pair to trade as low as 110.40, resistance now gets priced in at 111.00 – 110.77. This is the one pair for me that has followed a logical trading pattern, the risk to this pair is that traders start moving out of safe haven assets.
The GBPUSD traded higher during London and like the JPY traded above the 200 day MA at 1.2480, and this is where the market closed – right in the middle of the range. The pair found a bottom at 1.2420 and this where support still holds. This pair for me, like the others should make gains against the dollar today, but the market does seem indecisive.
We have mentioned above that all that is coming out of Washington, the Fed, China and Syria has left the markets in a state of confusion and the answer seems to climb into the dollar. Considering the ADP Employment report is a precursor to the NFP on Friday, the market could perhaps just be pricing in another show stopping number for Friday – the old “buy the rumour, sell the fact.” There is a lot of divergence starting to form, which means that momentum is starting to wane. I will be watching for divergence to make my decisions today.
Daily Ranges 06/04/2017
Majors
EURUSD
Resistance 1.0690 – 1.0710
Support 1.0640 – 1.0600
GBPUSD
Resistance 1.2480 – 1.2500
Support 1.2420 – 1.2400
AUDUSD
Resistance 0.7580 – 0.7600
Support 0.7530 – 0.7500
NZDUSD
Resistance 0.6990 – 0.7010
Support 0.6950 – 0.6930
USDCAD
Resistance 1.3430 – 1.3445
Support 1.3390 – 1.3370
USDJPY
Resistance 111.00 – 111.40
Support 110.40 – 110.20
USDCHF
Resistance 1.0030 – 1.0040
Support 1.0000 – 0.9970
Rand
USDZAR
Resistance 13.8350 – 13.8550
Support 13.6000 – 13.5370
EURZAR
Resistance 14.7540 – 14.8000
Support 14.5100 – 14.4500
GBPZAR
Resistance 17.2520 – 17.2900
Support 16.9430 – 16.9090
Minors
AUDCAD
Resistance 1.0160 – 1.0180
Support 1.0130 – 1.0100
AUDJPY
Resistance 84.20 – 84.40
Support 83.30 – 83.00
EURCHF
Resistance 1.0712 – 1.0730
Support 1.0670 – 1.0630
EURGBP
Resistance 0.8570 – 0.8600
Support 0.8520 – 0.8500
EURJPY
Resistance 118.40 – 118.60
Support 117.80 – 117.50
GBPJPY
Resistance 138.50 – 138.80
Support 137.50 – 137.20
GBPCAD
Resistance 1.6740 – 1.6760
Support 1.6670 – 1.6630
GBPCHF
Resistance 1.2530 – 1.2550
Support 1.2460 – 1.2430
Indices
DE30
Resistance 12280 – 12300
Support 12140 – 12110
UK100
Resistance 7350 – 7370
Support 7250 – 7230
US500
Resistance 2360 – 2380
Support 2330 – 2310
US30
Resistance 20700 – 20750
Support 20600 – 20580
SA40
Resistance 46600 – 46900
Support 46000 – 45700
Commodities
BRENT
Resistance 54.70 – 55.10
Support 53.90 – 53.70
XAUUSD
Resistance 1255.00 – 1260.00
Support 1240.00 – 1220.00
XAGUSD
Resistance 18.20 – 18.40
Support 18.00 – 17.90
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