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Dean Forex Market Commentary – 02 December 2016

A very interesting day in store for Forex traders. We have the Non-Farm Payrolls out this afternoon and that could provide some fireworks if it is a weak number. There is also the Italian referendum happening this weekend and very little has been spoken about this. It is NOT an in-out of Europe vote but the result could put pressure on authorities to offer one.

Dean's Daily FX Update – 02 December 2016

 

In the Zone

  • EURUSD
  • GBPUSD
  • USDCAD
  • USDJPY

Noteworthy News

  • French President Hollande confirmed that he will not stand for re-election next year, given all the political shift we have seen recently, could this be the next big change.

Recap

The market is continuing with what seems like a rotational shift ahead of the FOMC meeting, with both oil and bond yields have been on the march this past week, this has been the catalyst for the USD to continue with its recent strength. It seems as though the Feds talking heads are a little nervous with the current level of the dollar (could this be an excuse for a dovish FOMC in December) and as a result the US dollar had a small correction yesterday.

Today is the last big economic data day before the big Fed meeting, data thus far has been solid and there is no reason to believe that we won’t get that interest rate hike. NFP will take centre stage today as per usual, a major miss today could create a little short term volatility.

The EURUSD was able to take advantage of the evening session last night, price had fallen below both the 100 and 200 hour moving average lines which was a bearish signal but was able to stage a fightback. The pair is interestingly poised, the next major test comes between 1.0648 and 1.0683, price has not broken this resistance since the election and if this pair is going to test higher – a break of these levels will be vital.

I mentioned a couple weeks back that for me to get interested in the cable, I would need to see a daily close above 1.2675. Yesterday seemed like it could be the day and leading into the evening session price was again flirting with this level, it proved to be strong resistance once again and GBPUSD and the pair fell by over 100 pips at 1.2688. I have no doubt that sterling will have yet another attempt today but my stance remains the same – I need to see a daily close above 1.2675 to get vaguely interested.

Has the USDJPY finally found its lows, has the market finally drawn a line in the sand? The pair on three different occasions attempted to trade higher than 114.55 but immediately traded lower each time. The low for the day was at 113.67 and it did find some healthy support there, although there has been a push higher it has been a challenge – after moving 1,300 pips in 3 weeks some slowing momentum could be expected. I will prefer to use the 114.55 level as resistance leading into next week.

I think yesterday the Loonie finally opened its eyes and saw the oil price, despite higher oil prices on the back on OPEC meetings the USDCAD traded almost unchanged. This changed last night and the CAD trended lower, it has stalled at 1.3300 and this level is going to be keenly watched this morning.

The other commodity currencies were fairly predictable yesterday, both the AUDUSD and NZDUSD spent most of the day trading lower only to be propped up by the recovering metal prices.

 

Important Economic Data out today

  • 11:30                     GBP                       Construction PMI
  • 15:30                     CAD                       Employment Change
  • 15:30                     USD                       Unemployment Rate
  • 15:30                     USD                       Average Hourly Earnings
  • 15:30                     USD                       Non-Farm Employment Change
  • 15:30                     USD                       Unemployment Rate

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