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EURUSD: markets await NFP

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On Thursday the 3rd of August, trading on the euro/dollar pair closed up. After falling to 1.1831, the single currency trimmed its losses against the greenback with a jump to 1.1893. Euro bulls first received support from the Bank of England’s minutes and then from Mark Carney’s speech. The dollar then took a dive on the back of a sharp drop in US bond yields.

The pound came under pressure from an increase in votes on the MPC for maintaining interest rates at their current levels as well as from the central bank’s revision of GDP forecasts for 2017 and 2018. Mark Carney, the governor of the BoE, remarked that the uncertainty surrounding Britain’s exit from the EU is putting pressure on the country’s economic growth.

US 10Y bond yields have fallen by 2.34% to 2.21%. They’re vulnerable to the weak US services PMI data, which in July, fell to 53.9. The US employment index has fallen to 53.6 from 55.8.

US statistics:

  • ISM non-manufacturing PMI (Jul): 53.9 (forecast: 57.2, previous: 57.4).
  • Factory orders (Jun): 3.0% (forecast: 2.2%, previous: -0.3%).
  • Initial jobless claims (28 Jul): 240,000.

Day’s news (GMT 3):

  • 09:00 Germany: Factory orders (Jun).
  • 11:10 Eurozone: Markit retail PMI (Jul).
  • 15:30 USA: nonfarm payrolls (Jul), unemployment rate (Jul), average weekly hours (Jul), trade balance (Jul).
  • 15:30 Canada: net change in employment (Jul), unemployment rate (Jul).
  • 17:00 Canada: Ivey PMI (Jul).

EURUSD rate on the hourly. Source: TradingView

After quotes rose to 1.1893, the euro rate stabilised around 1.1878. The 45th degree acted as a resistance here. Over the course of 15 hours, a perfect symmetrical triangle has formed. The triangle signals a continuation of the trend, but given that trader attention is focused on the US jobs market today, the price could exit the triangle in any direction. Let’s not forget that the euro has held its position courtesy of the growth seen on the euro/pound cross. Any correction now on the crosses will go against the euro, and our main pair will start heading south.

I don’t make forecasts on payrolls day. The nonfarm payrolls report is usually unpredictable, no less the reaction to it. We could imagine various scenarios at the time of its publication, but I think it better to simply watch the market from the sidelines today.


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