In the first half of the day, the euro came under pressure from fears over the ECB’s QE program, brought about by the German court ruling. In the US session, the bulls recovered their losses and started trading up on the back of increased demand for risky assets.
The S&P500 closed up by 1.15%. This optimism was the result of some encouraging profit reports from companies, which overpowered the disappointing labour market statistics. Stock indices got an additional boost from news that US and Chinese officials have resumed telephone negotiations as they close in on agreeing the first stage of a trade deal. An unexpected rise in Chinese exports also played a role in the market dynamics.
Day’s news (GMT 3):
- 15:15 Canada: housing starts (Apr).
- 15:30 Canada: unemployment change (Apr), unemployment rate (Apr), building permits (Mar).
- 15:30 US: unemployment rate (Apr), nonfarm payrolls (Apr).
- 17:00 US: Baker Hughes US oil rig count.
The bulls managed to defend the 1.0860-1.0875 range. The pair’s rise gathered pace at 1.0855. Markets are in wait-and-see mode ahead of the NFP report in the US. They’re already braced for a bad showing. It’s important to take note of how the currency, stock, and crypto markets will react.
If the report triggers a wave of sales, the upwards correction will continue. Best case scenario is a recovery to the 112th degree at 1.0896. The 50% Fibo level of the drop from 1.1080 to 1.0755 is at 10894. This is a nice target zone for a double bearish divergence model to form, but we don’t make predictions on payrolls day.