John J Hardy
Saxo Bank’s head of FX strategy John Hardy takes a closer look at trends and moves in today’s forex charts, including EURUSD, USDJPY, AUDUSD, and EURSEK.
Article / 06 October 2016 at 21:47 GMT

US Market Wrap: Impending payrolls report lends support to dollar

FX Trade Strategist /

  • Australia: AIG Performance of construction Index                               2230 GMT 

US Data released: 

  • Challenger Job Cuts-September (44,324 vs. Aug. 32,180) 
  • Jobless Claims (Actual 249,000 vs. forecast 256,000) 

Forex traders appear convinced that US interest rates are going up, most likely in December. They should be convinced. Federal chair Janet Yellen and her colleagues have harped on ad nauseum that rate hikes were data dependent. Recent economic reports, especially employment-related ones, are rate hike worthy and today’s US Jobless Claims report reinforced that view.

The EURUSD trading range was relatively narrow. The single currency started the session at 1.1190 and slid steadily to 1.1140 by the end of the day. The move was driven by rising expectations of a hawkish Fed and by lingering European Central Bank taper concerns.

USDJPY bulls are firmly in control. The break above ¥102.05 snapped a downtrend that had been intact since the middle of July. Doubts arising from the Bank of Japan’s appetite for further easing, the outlook for higher US rates and bullish technicals have kept USDJPY bid.

Sterling had another bad day. GBPUSD was trading heavy when New York started and then the break of the previous day’s low of 1.2886 precipitated another drop. It halted at 1.2606. Rising Brexit concerns are behind the move. 

WTI broke above the glass ceiling at $50.00/barrel and traded up to $50.57/b. Reports that Saudi Arabia, Iran and Iraq will meet with Russia next week at an energy conference in Istanbul reinforced dreams that an Opec production cap could work. This week’s news of a decline in US crude inventories underpinned the rally.

Strangely, the Canadian dollar was not part of the oil rally. USDCAD moved higher with whispers that a possible M&A flow could be behind the strength. AUDUSD and NZDUSD edged higher in line with the firmer oil price.

US equities finished the day very close to flat, with traders’ content to await the nonfarm payrolls report tomorrow

 WTI has broken through $50.00/barrel, and reports that Opec members will meet with Russia next week in Turkey have raised hopes of a crude output cap. PhotoL iStock


Russia's defence spending may have helped to prop up the economy, writes TradingFloor contributor, Nadia Kazakova in: Revised Russian budget may show surprising rouble strength

– Edited by Robert Ryan

Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
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