Markets and economies are often on opposite sides of the barricades. They sometimes welcome weaker data as it suggests ultra-soft policy remains in place, just like now. But sometimes, it is necessary to look at the situation through the eyes of an economist. With this approach, weak data is a negative, and yesterday was something to look at.
Worryingly, a weak ADP report. According to this metric, another 6 million people need to be hired to return to the February 2020 peak. So, it takes another 12 months at the average rate seen year to date (+480K monthly).
The ISM manufacturing index rose from 59.5 to 59.9, higher than expected. But within the index, the employment component fell below the waterline to 49, reflecting contraction. The slowdown in price growth is shown by a 6.3 point drop in the corresponding element. Such figures create room for the Fed to take its time with the unwinding of stimulus.
Worryingly, a weak ADP report. According to this metric, another 6 million people need to be hired to return to the February 2020 peak. So, it takes another 12 months at the average rate seen year to date (+480K monthly).
The ISM manufacturing index rose from 59.5 to 59.9, higher than expected. But within the index, the employment component fell below the waterline to 49, reflecting contraction. The slowdown in price growth is shown by a 6.3 point drop in the corresponding element. Such figures create room for the Fed to take its time with the unwinding of stimulus.
US car sales fell to an annual rate of 13.1M in August compared with 14.8M a month earlier and a peak of 18.5M in April this year. For the most part, it's a matter of a shortage of some models due to chip supply issues, which is pulling up the average price of new cars y 16%. That said, we can see that the higher price is, like in textbook, reducing demand.
US weekly jobless claims marked further progress in the economy. The number of initial claims for the week to 28th of August fell to 340K (new pandemic lows) from 354K the week earlier. The number of continued claims fell by 160K in the week to 21st of August to 2,748K.
Americans are getting more active in starting new jobs amid the imminent end of unemployment benefits this month. Current wage levels seem closer to expectations than before. In addition, there is a record supply of open jobs on the market.
Positive data for the economy was not perceived as a threat to tapering Fed’s support. On the contrary, we see an increased demand for risk, with the S&P500 and Nasdaq making new highs. The Dow Jones is just 0.4% below its record.
On this news, dollar selling has intensified, sending DXY to 4-week lows. Oil is rallying over 3% since the start of the day. Gold again won support on the drop down to $1805, returning to $1812, but kept below $1820 this week.
Americans are getting more active in starting new jobs amid the imminent end of unemployment benefits this month. Current wage levels seem closer to expectations than before. In addition, there is a record supply of open jobs on the market.
Positive data for the economy was not perceived as a threat to tapering Fed’s support. On the contrary, we see an increased demand for risk, with the S&P500 and Nasdaq making new highs. The Dow Jones is just 0.4% below its record.
On this news, dollar selling has intensified, sending DXY to 4-week lows. Oil is rallying over 3% since the start of the day. Gold again won support on the drop down to $1805, returning to $1812, but kept below $1820 this week.
#AUDCHF broke daily down channel
• Likely to rise to resistance level 0.6800
AUDCHF currency pair recently broke the resistance trendline of the daily down channel from the start of July.
The breakout of this resistance trendline accelerated the active short-term impulse wave 1 from the end of August – which is further accelerated by strong AUD sentiment.
AUDCHF can be expected to rise further toward the next resistance level 0.6800 (top of wave 4 from the start of August, former strong support from July).
• Likely to rise to resistance level 0.6800
AUDCHF currency pair recently broke the resistance trendline of the daily down channel from the start of July.
The breakout of this resistance trendline accelerated the active short-term impulse wave 1 from the end of August – which is further accelerated by strong AUD sentiment.
AUDCHF can be expected to rise further toward the next resistance level 0.6800 (top of wave 4 from the start of August, former strong support from July).
#WTI broke resistance zone
• Likely to rise to resistance level 74,00
WTI crude oil recently broke the resistance zone lying between the resistance levels 69.10 and 70,00 (these levels have been reversing the price from the start of August).
The breakout of this resistance zone coincided with the breakout of the 61,8% Fibonacci correction of the downward impulse wave (c) from July.
WTI crude oil can be expected to rise further toward the next resistance 74,00 (top of wave (b) from the end of July).
• Likely to rise to resistance level 74,00
WTI crude oil recently broke the resistance zone lying between the resistance levels 69.10 and 70,00 (these levels have been reversing the price from the start of August).
The breakout of this resistance zone coincided with the breakout of the 61,8% Fibonacci correction of the downward impulse wave (c) from July.
WTI crude oil can be expected to rise further toward the next resistance 74,00 (top of wave (b) from the end of July).
Powell's speech a week ago, although it did not generate a strong market reaction, did change risk sentiment amongst traders. Today's NFP publication could put the dollar back into a long-term down-trend or revive interest in it.
Buoyed by assurances that the Fed will not rush to raise rates and is not concerned about inflation, news slightly higher than expected did not cause a pull into the dollar and a reassessment of rate expectations.
Early labour market indicators, from ADP and ISM employment components to weekly jobless claims, are setting up more modest expectations of 400-700K job growth, which promises to be bad news for the dollar, confirming the downtrend towards major competitors, most of which are taking a more hawkish approach to fight inflation.
Buoyed by assurances that the Fed will not rush to raise rates and is not concerned about inflation, news slightly higher than expected did not cause a pull into the dollar and a reassessment of rate expectations.
Early labour market indicators, from ADP and ISM employment components to weekly jobless claims, are setting up more modest expectations of 400-700K job growth, which promises to be bad news for the dollar, confirming the downtrend towards major competitors, most of which are taking a more hawkish approach to fight inflation.
🔔 Coming up today! Non-Farm Payrolls
🔜It is jobs day with the US release employment statistics at 12:30 GMT, which can spark big moves across FX and Stock markets. This report is seen as critical for the path of the Federal Reserve policy.
Market analysts expect 750K new jobs in August, down from 943K in July. Significantly higher numbers increase the chances Fed will announce tapering later this month, which promises to be good for USD and not-so-good for stocks.
Unexpectedly weak hiring numbers may demand more time for the Fed to assess economic progress before unwinding stimulus, which may be negative for the USD and help stocks to slowly creep up. Be prepared for increased volatility!
👉Register https://bit.ly/3n8rYtz & Trade CFDs responsibly with FxPro.com
🔜It is jobs day with the US release employment statistics at 12:30 GMT, which can spark big moves across FX and Stock markets. This report is seen as critical for the path of the Federal Reserve policy.
Market analysts expect 750K new jobs in August, down from 943K in July. Significantly higher numbers increase the chances Fed will announce tapering later this month, which promises to be good for USD and not-so-good for stocks.
Unexpectedly weak hiring numbers may demand more time for the Fed to assess economic progress before unwinding stimulus, which may be negative for the USD and help stocks to slowly creep up. Be prepared for increased volatility!
👉Register https://bit.ly/3n8rYtz & Trade CFDs responsibly with FxPro.com
The US created 235K new jobs, drastically worse than the expected 750K. Estimates for July increased by 110K to 1,053K
The rise in coronavirus cases last month had a visibly negative impact on the pace of labour market recovery.
At the same time, it would be incorrect to speak of a depressed state. Average hourly earnings jumped 0.6% m/m and 4.3% y/y last month.
The high rate of wage growth offsets the negative impact of weak employment growth, strengthening the inflationary spiral and supporting inflation expectations.
In our view, despite the wage data, the weak hiring rate will contribute to pressure on the dollar in the coming days as it creates room for the Fed to take its time in starting the unwinding and postpone the decision until November or December meetings.
The rise in coronavirus cases last month had a visibly negative impact on the pace of labour market recovery.
At the same time, it would be incorrect to speak of a depressed state. Average hourly earnings jumped 0.6% m/m and 4.3% y/y last month.
The high rate of wage growth offsets the negative impact of weak employment growth, strengthening the inflationary spiral and supporting inflation expectations.
In our view, despite the wage data, the weak hiring rate will contribute to pressure on the dollar in the coming days as it creates room for the Fed to take its time in starting the unwinding and postpone the decision until November or December meetings.
#USDJPY reversed from resistance level 110.50
• Likely to fall to support level 109.25
USDJPY currency pair recently reversed down with the daily Shooting Star form the key resistance level 110.50, intersecting with the daily upper Bollinger Band.
The downward reversal from the resistance level 110.50 stopped the previous impulse waves (iii), 3 and (3).
USDJPY can be expected to fall further toward the next support level 109.25 (which has been steadily reversing the price from June).
• Likely to fall to support level 109.25
USDJPY currency pair recently reversed down with the daily Shooting Star form the key resistance level 110.50, intersecting with the daily upper Bollinger Band.
The downward reversal from the resistance level 110.50 stopped the previous impulse waves (iii), 3 and (3).
USDJPY can be expected to fall further toward the next support level 109.25 (which has been steadily reversing the price from June).
#Silver broke resistance area
• Likely to rise to resistance level 25.00
Silver today broke the resistance area lying between the resistance level 24.00, resistance trendline of the daily down channel from June and the 38.2% Fibonacci correction of the downward impulse from July.
The breakout of this resistance area accelerated the active short-term ABC correction 2 from the middle of August
Silver can be expected to rise further toward the next key resistance level 25.00 (target price for the completion of the active correction 2).
• Likely to rise to resistance level 25.00
Silver today broke the resistance area lying between the resistance level 24.00, resistance trendline of the daily down channel from June and the 38.2% Fibonacci correction of the downward impulse from July.
The breakout of this resistance area accelerated the active short-term ABC correction 2 from the middle of August
Silver can be expected to rise further toward the next key resistance level 25.00 (target price for the completion of the active correction 2).
#GBPUSD broke resistance area
• Likely to rise to resistance level 1.3960
GBPUSD recently broke the resistance area lying between the resistance level 1.3800 (top of wave 1) and the 38.2% Fibonacci correction of the downward impulse (C) from May.
The breakout of this resistance area accelerated the active impulse waves 3 and (3).
GBPUSD can be expected to rise further toward the next strong resistance level 1.3960 (target for the completion of wave 3, which has been reversing the price from June).
• Likely to rise to resistance level 1.3960
GBPUSD recently broke the resistance area lying between the resistance level 1.3800 (top of wave 1) and the 38.2% Fibonacci correction of the downward impulse (C) from May.
The breakout of this resistance area accelerated the active impulse waves 3 and (3).
GBPUSD can be expected to rise further toward the next strong resistance level 1.3960 (target for the completion of wave 3, which has been reversing the price from June).
Bitcoin and gold fall bring back interest to the dollar
On Tuesday, the dollar added around 0.5% to a basket of the six most popular currencies on turbulence in some market sectors.
The "buy rumours, sell facts" model played out in full force yesterday and may continue to dominate the markets for quite some time.
Bitcoin has officially become legal tender in El Salvador. Both media and social media have spurred interest in the event in recent weeks.
The price reaching the $53k area triggered big profit-taking, which quickly escalated into a margin call that pushed the price back by $10k at one point.
There was a telling sell-off in precious metals, where gold lost about 1.5% to $1800, while silver and platinum fell over 2%, to $24.2 and $1000, respectively. These metals were pushed back to critical technical levels, once again raising the question that investors are ready to switch to long position liquidation mode very quickly.
On Tuesday, the dollar added around 0.5% to a basket of the six most popular currencies on turbulence in some market sectors.
The "buy rumours, sell facts" model played out in full force yesterday and may continue to dominate the markets for quite some time.
Bitcoin has officially become legal tender in El Salvador. Both media and social media have spurred interest in the event in recent weeks.
The price reaching the $53k area triggered big profit-taking, which quickly escalated into a margin call that pushed the price back by $10k at one point.
There was a telling sell-off in precious metals, where gold lost about 1.5% to $1800, while silver and platinum fell over 2%, to $24.2 and $1000, respectively. These metals were pushed back to critical technical levels, once again raising the question that investors are ready to switch to long position liquidation mode very quickly.
This was also reflected in the Wall Streets Fear Gauge, the VIX, which jumped 15.7% on Tuesday. Remarkably, the local lows of the index have been increasingly higher since July, which means that the lull in the markets is becoming less and less calm.
The drop in bitcoin and gold and the jump in the VIX points to increased nervousness in the markets. In such an environment, investors often perceive a relatively neutral news backdrop as an excuse to tread carefully to lock in profits. However, the dynamics of the same Bitcoin clearly show how quickly the market can move from this phase to margin calls, when a broad pull into the most liquid and defensive securities is formed, triggering strong demand for the dollar.
Historically, September is considered the worst month for the stock market, as funds and investors often lock in profits towards the end of the US financial year. And we already see a clear manifestation of this traction in instruments sensitive to the pull into risky assets.
The drop in bitcoin and gold and the jump in the VIX points to increased nervousness in the markets. In such an environment, investors often perceive a relatively neutral news backdrop as an excuse to tread carefully to lock in profits. However, the dynamics of the same Bitcoin clearly show how quickly the market can move from this phase to margin calls, when a broad pull into the most liquid and defensive securities is formed, triggering strong demand for the dollar.
Historically, September is considered the worst month for the stock market, as funds and investors often lock in profits towards the end of the US financial year. And we already see a clear manifestation of this traction in instruments sensitive to the pull into risky assets.
The USDCAD rallied strongly earlier in the week on a decline towards the cross of the 50- and 200-day moving averages. The sharp jump of 1.2% to 1.2700 should be taken as a signal that investors in North America remain bullish on the USD despite short-term risks from the Bank of Canada rate meeting.
There is a "golden cross" in the USDCAD when the 50 SMA crosses the 200 SMA from the bottom to the top. In June, the pair sharply broke the resistance of the 50-day moving average and turned into support, which was confirmed in the previous week.
The 200 SMA is a bigger calibre weapon, and it acts as a long-term trend indicator. This month we are seeing more signs that this line is moving into support from resistance as well.
A bullish picture for the USDCAD opens the pair to the 1.3000 area, an important round level, plus the 2019 support and the 61.8% pullback of the pair's March 2020 to June 2021 peaks are concentrated here.
There is a "golden cross" in the USDCAD when the 50 SMA crosses the 200 SMA from the bottom to the top. In June, the pair sharply broke the resistance of the 50-day moving average and turned into support, which was confirmed in the previous week.
The 200 SMA is a bigger calibre weapon, and it acts as a long-term trend indicator. This month we are seeing more signs that this line is moving into support from resistance as well.
A bullish picture for the USDCAD opens the pair to the 1.3000 area, an important round level, plus the 2019 support and the 61.8% pullback of the pair's March 2020 to June 2021 peaks are concentrated here.
Buy the dip for Value-companies still works
The stock markets are again dominated by the idea of weaker growth, which will require an extension of the current stimulus for some more time.
New highs in the Nasdaq contrast with the retreat of the Dow Jones and DAX, all repeating last year's situation when markets bet on "growth" (mainly Tech) stocks. The re-birth of this idea has increased following a series of weak US economic reports and signs that the pace of recovery in Europe and China is fading.
However, there are also differences from what we see now and a year ago, when investors really didn't see the light at the end of the tunnel, and it was many months before the widespread use of vaccines.
A good reminder that the world is heading towards a reduction in stimulus is the end of the additional jobless payment programmes in the US.
Major central banks, for their part, are already officially choosing the moment to start policy normalisation, and it may come sooner than optimists hope. The outperformance of technology companies risks an abrupt halt as soon as the monetary watchdogs confirm their policy stance towards a withdrawal of support. This makes a buying strategy relevant for downturns in "value" stocks, which retain their global appeal but have been somewhat subdued of late.
The stock markets are again dominated by the idea of weaker growth, which will require an extension of the current stimulus for some more time.
New highs in the Nasdaq contrast with the retreat of the Dow Jones and DAX, all repeating last year's situation when markets bet on "growth" (mainly Tech) stocks. The re-birth of this idea has increased following a series of weak US economic reports and signs that the pace of recovery in Europe and China is fading.
However, there are also differences from what we see now and a year ago, when investors really didn't see the light at the end of the tunnel, and it was many months before the widespread use of vaccines.
A good reminder that the world is heading towards a reduction in stimulus is the end of the additional jobless payment programmes in the US.
Major central banks, for their part, are already officially choosing the moment to start policy normalisation, and it may come sooner than optimists hope. The outperformance of technology companies risks an abrupt halt as soon as the monetary watchdogs confirm their policy stance towards a withdrawal of support. This makes a buying strategy relevant for downturns in "value" stocks, which retain their global appeal but have been somewhat subdued of late.
#NTG (Natural gas) broke major resistance area
• Likely to rise to resistance levels 5.0 and 5.2
Natural gas earlier broke through the major resistance area located between the multi-year resistance level 4.895 (which started the sharp downtrend at the end of 2018) and the resistance trendline of the weekly up channel from April.
The breakout of this resistance area is aligned with the active sharp upward impulse waves 5 and (C).
If the price closes today above 4.895, Natural gas can be expected to rise further toward the next resistance levels 5.0 and 5.2.
• Likely to rise to resistance levels 5.0 and 5.2
Natural gas earlier broke through the major resistance area located between the multi-year resistance level 4.895 (which started the sharp downtrend at the end of 2018) and the resistance trendline of the weekly up channel from April.
The breakout of this resistance area is aligned with the active sharp upward impulse waves 5 and (C).
If the price closes today above 4.895, Natural gas can be expected to rise further toward the next resistance levels 5.0 and 5.2.
#EURUSD reversed from resistance area
• Likely to test support level 1.1750
EURUSD currency pair recently reversed down from the resistance area set between the pivotal resistance level 1.19 (which has been reversing the price from July) and the 38.2% Fibonacci correction of the downward impulse (C) from May.
The downward reversal from this resistance area started the active corrective wave (2).
EURUSD currency pair can be expected to fall further toward the next support level 1.1750 (target for the completion of the active corrective wave (2)).
• Likely to test support level 1.1750
EURUSD currency pair recently reversed down from the resistance area set between the pivotal resistance level 1.19 (which has been reversing the price from July) and the 38.2% Fibonacci correction of the downward impulse (C) from May.
The downward reversal from this resistance area started the active corrective wave (2).
EURUSD currency pair can be expected to fall further toward the next support level 1.1750 (target for the completion of the active corrective wave (2)).
During the day, Bitcoin dropped to $44,400, but the price managed to return to the level above $46,000. The altcoin market froze, waiting for the next BTC price move.
The decision of El Salvador, apparently, does not allow many to sleep well. Suddenly, the Ukrainian parliament adopted the law about digital assets, which will officially introduce cryptocurrencies into the legal field. But don't be in a hurry to rejoice. The essence of the project is that people can now open crypto accounts in banks, and if the fact of fraud with cryptos is recorded, one can go to court with that and get some protection. It is still impossible to pay with coins for products and services in Ukraine.
Perhaps this is for the best: Bloomberg published an article that El Salvador faced a sell-off in government bonds on Wednesday. In this way, investors are reportedly trying to take revenge on the country for adopting BTC.
Trade cryptos 24/7 on the FxPro platforms: https://www.fxpro.com/trading/cryptocurrencies 👈🏻
The decision of El Salvador, apparently, does not allow many to sleep well. Suddenly, the Ukrainian parliament adopted the law about digital assets, which will officially introduce cryptocurrencies into the legal field. But don't be in a hurry to rejoice. The essence of the project is that people can now open crypto accounts in banks, and if the fact of fraud with cryptos is recorded, one can go to court with that and get some protection. It is still impossible to pay with coins for products and services in Ukraine.
Perhaps this is for the best: Bloomberg published an article that El Salvador faced a sell-off in government bonds on Wednesday. In this way, investors are reportedly trying to take revenge on the country for adopting BTC.
Trade cryptos 24/7 on the FxPro platforms: https://www.fxpro.com/trading/cryptocurrencies 👈🏻