Press review - page 350

[Sergey Golubev]

What To Expecе From US NFP - review (based on efxnews article)

• Goldman: "We forecast nonfarm payroll growth of 215k in September, above consensus expectations of 200k by about 0.3 standard deviations of a typical surprise. Labor market indicators were mixed in September, and we therefore expect a print roughly in line with the 212k monthly average seen so far in 2015. We also expect a substantial upward revision to August payrolls. Since 2003, the five industries with the clearest August bias have had an average August deceleration of 40k relative to the prior three months and a subsequent upward revision of 35k. This year, these industries decelerated by a combined 56k, and the deceleration excluding government payrolls was 83k. We expect the unemployment rate to remain at 5.1% in September from an unrounded 5.11% in August, but it’s a close call... At 5.1%, the unemployment rate is currently two­tenths above the FOMC’s estimate of the longer run or “structural” rate."
• Morgan Stanley: "The release of weak US manufacturing data should not take our focus away from stronger US domestic demand conditions and labour market strength. Our colleague, Ted Wieseman, ranked as the top NFP forecaster by Bloomberg, estimates a 190k NFP rise, which is below the 201k consensus call, but sufficiently strong for the Fed to hike in December. With rates markets underpricing a December hike and given our more risk friendly near-term outlook, we have identified USDCHF longs as the best FX vehicle to play for higher US rates."
• BofA Merrill: "The labor market likely added 190,000 jobs in September, following the recent trend. Based on our forecast, the three-month average will slow to 204,000 but the six-month will increase to 217,000. The unemployment rate should hold steady at 5.1% while average hourly earnings increase 0.2% mom. This would be the third consecutive solid gain on a monthly basis, therefore translating to a 2.4% yoy rate. Plugging in a 0.2% mom gain for the remaining months of the year would leave wages up 2.7% yoy in December."
• Deutsche Bank: "We expect a modest rebound in September nonfarm payroll growth (200k), following a lackluster August gain, which may be revised higher. Recall that we had expected a weak August payroll print going into the report, because. we had noticed a historical tendency for August payrolls to disappoint. In similar fashion, there has been a trend of upward revisions to August payroll gains. This has been the case in each of the last five years as August payrolls have been revised up by an average of 79k...We expect average hourly earnings (AHE) to rise +0.2%, which would have the effect of raising the yearover-year growth rate two tenths to 2.4%. If this is the case, it will mark the highest growth rate since August 2009 (2.4%)...DB sees unemployment rate unchanged at 5.1%."

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2015-10-02 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Non-Farm Employment Change]

• past data is 173K
• forecast data is 202K
• actual data is n/a according to the latest press release

if actual > forecast (or previous data) = good for currency (for USD in our case)

[USD - Non-Farm Employment Change] = Change in the number of employed people during the previous month, excluding the farming industry. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.

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EURUSD M5: 100 pips ranging price movement by USD - Non-Farm Employment Change news event:

[Sergey Golubev]

2015-10-02 13:30 GMT | [USD - Non-Farm Employment Change]

• past data is 173K
• forecast data is 201K
• actual data is 142K according to the latest press release

if actual > forecast (or previous data) = good for currency (for USD in our case)

[USD - Non-Farm Employment Change] = Change in the number of employed people during the previous month, excluding the farming industry.

==========

• "Total nonfarm payroll employment increased by 142,000 in September, and the unemployment rate was unchanged at 5.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and information, while mining employment fell."
• "In September, the unemployment rate held at 5.1 percent, and the number of unemployed persons (7.9 million) changed little. Over the year, the unemployment rate and the number of unemployed persons were down by 0.8 percentage point and 1.3 million, respectively."
  

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EURUSD M5: 161 pips price movement by USD - Non-Farm Employment Change news event:

Gold (XAU/USD) went to the bullish market condition - on close bar for M5 timeframe, and on open bar on H4 chart:

[Sergey Golubev]

Forex Weekly Outlook October 5-9 (based on forexcrunch article)

US ISM Non-Manufacturing PMI, Trade Balance, Mario Draghi’s speech, rate decision in Japan, Australia and the UK, US Unemployment Claims, FOMC Meeting Minutes, Canadian employment data and Stephen Poloz’ speech are the main events on Forex calendar. Here is an outlook on the market movers for this week.

Last week U.S. major job report for September was a big disappointment, showing a lukewarm job gain of 142,000 positions, far below the 201,000 reading forecasted by analysts. Meanwhile, the unemployment rate remained unchanged at 5.1% due to a further deterioration in the labor force participation rate, plunging to 62.4%, the worse rate since October 1977. Furthermore, wages remained flat, indicating subdued inflationary pressures. The negative report cools expectations for a near-term rate hike.

1. US ISM Non-Manufacturing PMI: Monday, 14:00. The U.S. service sector expanded more than expected in August, showing a solid growth rate, but was weaker than July’s reading.  Non-manufacturing purchasing managers index declined to 59 in August from 60.3 in the prior month. July’s reading was the highest since 2008. The upbeat release indicates solid growth in the US domestic economy. The non-manufacturing purchasing managers index is expected to decline further to 58.0 this time.
2. Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia kept the cash rate at 2% for the fourth month in a row, after a quarter of a percentage point cut performed in May. Market volatility in China and fears its negative economic effects were the main reason for maintaining rates unchanged. Most analysts expected the RBA to maintain its monetary policy until the end of the year. However, some economists said the RBA could cut the cash rate for the third time this year in November.
3. US Trade Balance: Tuesday, 12:30. The U.S. trade deficit contracted in July to $41.9 billion, its lowest level in five months, indicating the US economy continues to strengthen, despite a global growth slowdown. Economists expected the trade gap to reach $43.2 billion. Exports increased 0.4% to $188.5 billion, the first increase since April. Imports of consumer goods declined in July. U.S. trade deficit is expected to reach $42.2 billion.
4. Mario Draghi speaks: Tuesday, 17:00. ECB President Mario Draghi is scheduled to speak in Frankfurt. He may talk about the recent ECB downgrade of the Eurozone’s economic outlook as well as the continuous deterioration in inflation levels. Clues about further QE measures may be enclosed. Market volatility is expected.
5. Japan rate decision: Wednesday. The Bank of Japan maintained its monetary policy in September, admitting Japan’s economic growth was held back by the slowdown in emerging economies, but the BOJ believes advanced economies continue to grow at a moderate pace despite the slowdown of emerging economies. Therefore, the general growth trend remains positive. The BOJ will also expand the monetary base at about $667 billion a year to boost inflation.
6. UK rate decision: Thursday, 11:00. The Bank of England voted to keep interest rates on hold in its September meeting. The Central Bank also lowered its estimate for the UK’s economic growth in the third quarter from 0.7% to 0.6%. Policy makers also claimed that the slowdown in Chinese economy and in emerging economies could badly affect UK’s economic growth. However, despite this, the MPC remained optimistic about the UK economy. A bank is expected to raise rates gradually starting from the first half of 2016.
7. US Unemployment Claims: Thursday, 12:30. U.S. jobless claims increased by 10,000 to 277,000 last week, but remained near 15-year lows. Economists expected the number of claims to reach 273,000. The four-week moving average declined 1,000 to 270,750. The total number of people receiving jobless benefits is 2.19 million. The labor market continues to strengthen hand in hand with economic growth. Analysts expect the number of jobless claims to reach 274,000 this week.
8. US FOMC Meeting Minutes: Thursday, 18:00. Federal Reserve policymakers said in July, they are nearing the central bank’s first interest rate hike in almost a decade but require further improvement in the economy and the labor market. Despite encouraging economic data releases, the FOMC decided to postpone September’s rate hike. The current minute’s data will provide further insight as to the reasons for this dramatic delay.
9. Canadian employment data: Friday, 12:30. Canada labor market added an unexpected 12,000 jobs in August, while expected to contract by 4,800. However, the unemployment rate rose to a one-year high of 7% as the participation rate edged up to 65.9% from 65.7%. Overall, the rise in full-time work showed a positive improvement in the Canadian job market, which can offset the rise in the unemployment rate.
10. Stephen Poloz speaks: Saturday, 18:45. BOC Governor Stephen Poloz is due to speak at the Institute of International Finance, in Lima. In a recent speech, Polozs said he believes Canada will bounce back from oil plunge despite current hardships. Companies may scale back investment and production amid lower prices, but this will boost demand, which eventually will lead to a price increase.

[Sergey Golubev]

EUR: Outlooks For The Coming Week - Morgan Stanley (based on efxnews article)

"EUR: EUR Still Driven by Risk. Neutral.
As risk sees some relief, we would expect EUR to see some pressure, given the inverse relationship between EUR and equities. We like tactically trading short EUR/EM crosses, though we would be selective on EM currencies. EURUSD could also weaken in this environment. Over the medium term, we also expect EUR to head lower, on the back of divergence in monetary policy between Europe and the rest of the world."

[Sergey Golubev]

EUR/USD: Levels & Targets by UOB (based on efxnews article)

UOB expects for EUR/USD the ranging within 1.1160 and 1.1275.

• "It is likely that a temporary top is in place but the down-move from the high is viewed as part of a consolidation and not the start of a sustained downmove."
  
• "From here, only a clear break above 1.1330 will shift the current neutral outlook to bearish. In the meanwhile, this pair is expected to trade in choppy manner, likely within 1.1115 and 1.1330 for another week or so."
  

[Sergey Golubev]

Intraday Outlooks for EUR/USD by SEB (based on efxnews article)

EUR/USD: "Sellers keep responding. Thinned dynamic resistance keeps attracting responsive selling, but bears' initiative below 1.1150/05 is needed to confirm the ongoing bearish "Flag". Current intraday stretches are located at 1.1115 & 1.1285."

[Sergey Golubev]

EUR and the global risk picture - Morgan Stanley (based on efxnews article)

Morgan Stanley is expecting for EUR/USd to be in breakdown below 1.1120/1.1100 level with 1.0850 as a next target with the possibility to break resistance levels in spike way in short-term situation for example:

• "A more risk positive environment appears to be developing for currencies markets which should continue to provide some short-term relief for commodity-related currencies and selective EM currencies."
  
• "However, the reaction in currency markets, so far, has been more muted than may have been expected. This may cause some questioning of the relationship between currencies and the risk environment."
  
• "We think it does, although it has been challenged on occasions recently. Indeed, monetary policy expectations are also having a strong influence on the EUR. Our FX drivers analysis suggests that front-end rates are having an equally strong positive relationship with the EUR as the negative risk relationship."
• "Hence, while we believe that the relationship between the EUR and the global risk picture remains intact, it has loosened and is now more prone to challenges and shift in policy expectations."
• "Overall, in the current environment we expect the EUR to put pressure on the lower end of the range, with a break below 1.1120/00 opening the way for a EURUSD decline towards 1.0850. But risk-off events should still generate EUR spikes higher."
  

As we see from the chart above - the price is on bearish with the ranging within the following support/resistance levels:

• 1.1459 resistance level located inside Ichimoku cloud in the ranging area of the chart, the next target in this case is 1.2655 'reversal' resistance level located in the primary bullish area of the chart, and
• 1.0924 support level located in the bearish area with 1.0807 as a next bearish target.

Thus, the most expected scenario is the following: the price will go down for breaking 1.0924 with 1.0807 as the next bearish target. As we are talking about the ranging market condition for this pair so we should expect some local downtrend as a bear market rally up to 1.1459 resistance in short-term basis for example.

[Sergey Golubev]

FOMC Minutes expectations by Barclays Capital (based on efxnews article)

Barclays Capital made some expectation and forecasting concerning upcoming Federal Open Market Committee Minutes:

• "Since the September FOMC meeting, a number of FOMC participants have declared that the decision not to raise rates was “close”. We look to the minutes to provide some insight into this statement."
• "We also look to the minutes for context on the new sentence inserted into the September statement acknowledging risks from global economic and financial developments."
• "The minutes are likely to reveal the balance of sentiment between those members who preferred to look through these risks and those members who pushed to postpone any rate hike in an abundance of caution."
• "In addition, the minutes should reveal the number of members who are focused on economic activity abroad rather than just the financial market spillovers to the US."

Just to remind one trading rules for high impacted news event such as FOMC Minutes: more hawkish than expected = good for currency (for USD in our case).

From the technical points of view, the EUR/USD is moved on the border between the primary bearish and the primary bullish in intra-day H4 chart and on daily chart, and any good high impacted news event can move the price to any direction for example. Key support/resistance levels for EUR/USD H4 are the following: 1.1317 bullish resistance and 1.1134 bearish support. On the daily chart we may see 1.1579 key resistance and 1.0878 key support levels.

Once the price breaks key support/resistance levels at least in intra-day basis so it may be the good sign for the direction to be chosen by the price for the next week for example.

[Sergey Golubev]

Intraday Outlooks for EUR/USD and Gold - SEB (based on efxnews article)

EUR/USD: "Another 1.13+test underway. Even though most factors speaks in favor of a bear flag being under construction since Sept 22 the short term charts speaks of more near term upside risk. The move above 1.1273 triggers an hourly buy signal calling for a test of the flag’s upper boundary, 1.1340-ish (and then turning for a downside test). To avoid the above scenario prices must fall back below 1.1211."

Gold: "Small setback likely before sharply up. Trendline sellers mark a "Triangle" wave point “D” and it should ideally be followed by a short & shallow “E-wave low, somewhere around 1,131/26 before moving up for the BIGbreak out of the formation to challenge resistance at 1169\70, 1,184 to reach the extension objective at 1,192."

[Sergey Golubev]

Intraday Outlooks for EUR/USD by SEB (based on efxnews article)

EUR/USD: "Flag ceiling basically met. The pair did the anticipated up and down move. The rejection from the upper boundary does now indicate that a new attempt to exit the flag to the downside should be seen next week."