It's been a busy day for US markets as the dollar bulls have finally had a decent time to shine on the back of positive economic data and dollar bears unwinding positions. ADP non-farm payroll data, a leading indicator of the upcoming non-farm payroll data, forecasted a drop to 156K (196k exp). This should come as no surprise as the labour market in the US is very strong and saturated at present, but traders will be looking at the weaker number and expecting something like that. It was not all bad news though as trade balance data came in much stronger than expected at -40.4B (41.4B exp) and ISM Non-manufacturing PMI lifted to 55.7 (54.8 exp). This certainly bolstered the US markets and the US dollar and many will be watching closely the upcoming unemployment claims in the next 24 hours.
The equity markets have been getting quite interesting with the movements in the USD and the positive data, which many think will cause the FED to be more positive to a rate hike. But for the S&P 500 it has been a bearish day overall as it slid down the charts to touch on the 50 day moving average which acted as dynamic support. The next leg down from here is likely to be support at 2031 and traders will be aiming for this level if the S&P 500 looks to extend lower on the charts. The advent of a rate hike is something always in the back of traders' minds as cheap money will someday come to an end and it will have the largest impact on equity markets.
The Japanese Yen has been fluctuating heavily as of late on the back of so called 'currency speculation' in the market place. Shinzo Abe has been quick to jump on this after the jump in the value of the Yen, but what I really feel is that the market is seeing if there's a chance of intervention in the currency markets for the Yen. Previously before Abenomics the BoJ was quick to intervene in currency markets and as such the market was quick to force it into such situations.
On the charts this has lead to the market looked to punish USDJPY traders and push for further lows in an effort to gain some reaction. At present the USDJPY has found some serious support at 105.432 and the market will be looking to see if this level holds in the short term or if we in fact see some sort of double bottom as we have seen previously in the past. The push higher has also found resistance at 107.239, but the overall trend has been very bearish in recent times. I would expect after the recent failures to push through for the bearish trend to continue at least in the short term until the BoJ looks to intervene in the currency markets.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.