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Friday, July 7th
The EUR/USD pair continues to consolidate its positions above the level of 1.14, after brief upside rally, triggered by by downbeat ADP jobs data. Moreover, slightly hawkish tone of ECB minutes also added some bullish momentum to the euro against its competitors, showing narrowing monetary policy divergence between the Fed and ECB. Adding to this, increased cautiousness ahead of the key risky event of this Friday is lending extra support to the pair at end of this week. On the other hand, broad US dollar recovery after yesterday’s decline is weighing the pair this morning, forcing it to drift away from weekly tops, marked in Asia at 1.1425 spot. Now all eyes are glued to the much-awaited US payrolls report, which will be able to shape up pair’s further direction, while the EU docket will remain silent at the end of this week, which means that the USD dynamics and risk trend will remain the main drivers for the pair during the European trading session.
The USD/CAD pair is oscillating within 20 narrow range between 1.2970-90 so far this session, however, extending its recovery from 10-month lows, posted at 1.2912 earlier this week. Yesterday the pair received strong bearish momentum after disappointing US ADP report and recovery of oil prices, backed by a massive drawdown in the US oil inventories. However, the pair managed to regain its positive tone, as the US dollar corrects higher after sharp decline on the back of profit-taking actions ahead of the key NFP data, which will be published later ahead. On the other hand, traders will also closely watch for Canadian data from the labor market, which could hint on further monetary policy tightening measures, especially after recent hawkish talks by BoC members.
The GBP/USD pair broke out of its consolidation phase to the downside in early Europe, as the US dollar corrects higher after its yesterday slump. On Thursday, the pair came under strong wave of bids following lower-than-expected ADP jobs data, which is considered as a proxy for the US NFP report. However, growing cautiousness ahead of the key risky event of this Friday and streak of disappointing PMIs, seen lately, will continue to keep the pound under pressure at the end of this week. Meanwhile, traders remain in anticipation of the biggest risk event of this day, which is NFP release, while UK manufacturing production data will also be able to bring some impetus to the pair during European trading hours.
The USD/JPY pair gained strong bullish momentum in mid-Asia, having refreshed its 2-month highs at 113.83 level, after recent headlines, reporting that the BoJ is going to increase bond purchase. However, further upside of the pair looks fragile, as the market turns cautious ahead upcoming key data from the US labor market. There are mixed feeling on what to expect today from NFP, especially after disappointing report from the ADP, which showed that the private sector added less jobs than expected. So, traders today will closely watch for the key NFP data, due later during the NA session, while shrinking risk appetite will continue to support the yen during this day.
The main events of the day:
UK Manufacturing Production – 11.30 (GMT +3)
US Nonfarm Payrolls – 15.30 (GMT +3)
US Unemployment Rate – 15.30 (GMT +3)
Canadian Employment Change – 15.30 (GMT +3)
BoE Governor M.Carney’s Speech – 16.00 (GMT +3)
Canadian Ivey PMI – 17.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1297 R. 1.1487
USDJPY S. 112.60 R. 113.76
GBPUSD S. 1.2892 R. 1.3022
USDCHF S. 0.9562 R. 0.9682
AUDUSD S. 0.7553 R. 0.7629
NZDUSD S. 0.7223 R. 0.7317
USDCAD S. 1.2900 R. 1.3022
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