Market follows U.S. Employment Report and Chinese Trade Balance. Here is the overall market trend.
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This article is originally referred from Daily FXGlobe.
Forex markets had a very calm day, as we expected, following the strong moves on Friday after the release of the much better than expected U.S. Employment Report. The Dollar finished close to unchanged against most of its counterparts, as it consolidated last week’s gains. The Japanese Yen was the weakest currency of the session as Asian markets got higher following the release of a slightly bullish Chinese Trade Balance number.
Commodities and related currencies were mixed, as oil continued higher, this time rising by more than 2.5%, while precious metals had a quiet and flat day following Friday’s decline. The Australian Dollar staged an encouraging rally, as it recovered all of its losses from Friday, with the New Zealand Dollar and the Canadian Dollar finishing unchanged against the USD, despite the positive international sentiment. The Pound started the day well, but the currency faded compared to the majors in late trading again.
AUD/USD (current price: 0.7638)
The Australian Dollar continues to show relative strength, despite the recent correction in oil and the interest rate cut by the Royal Bank of Australia last week. The local economy looks to be resilient to the weakness in Asia, and yesterday’s better than expected Chinese Trade Balance gave a boost to risk assets in the region. The pair rose back to the key resistance level at 0.7650, and a break-out above that zone is possible if global sentiment remains positive.
Our assessment: AUD/USD is still in a short-term uptrend, despite the negative environment for the commodity-currency, and the recent broad rally in the Dollar.
USD/JPY (current price: 102.33)
The Japanese Yen finally got weaker following a very strong rally after the hawkish BOJ statement two weeks ago. The positive news regarding the U.S. economy on Friday and the Chinese economy yesterday were enough to push the pair higher after it got close to the all-important 100 level again last week. The Japanese Economic Sentiment Index came in at 45.1 compared to the expectations of a 42.6 reading, and also helped the rally in the cross on Monday. The Dollar might be in for a long-term rally if the economic numbers continue to stay constructive in the coming months.
Our assessment: USD/JPY is still inside a declining long-term channel, but the short-term prospects might be more bullish following the positive U.S. jobs numbers, and continued rally in global risk assets.
EUR/GBP (current price: 0.8522)
The pair broke out of a bullish short-term flag consolidation pattern, as we expected after a low-volatility post-Brexit period. The cross might be headed for new highs above the key 0.86 level, especially if the British economic numbers continue to weaken in the coming weeks. Last week’s strong response by the BOE also puts pressure on the Pound, as investors now think that further easing by the central bank is likely later on this year.
Our assessment: The prior high near 0.86 is getting close again for the cross, and the short-term momentum seems bullish, with a possible new uptrend developing.
WTI Crude Oil (current price: $43.17)
The most traded commodity continued its correction on Monday, on some bullish news regarding production cuts in Venezuela and the U.S. Oil is now firmly back above the crucial support/resistance level at $41.25, and until that zone holds more upside is possible, following the more than 20% decline since mid-June. The overall fundamental picture is still questionable for the oil, so the commodity might be more vulnerable to changes in risk-appetite than usual.
Our assessment: Oil is getting close to a strong resistance level at $44, with the upper boundary of the short-term trend channel also looming near that zone, but a few days of strength might still be possible despite the long-term downtrend.
The Great British Pound and the U.S. Dollar will probably be in focus today regarding economic releases following the calm session yesterday. The British Manufacturing Production is the most anticipated indicator of the morning session, while U.S. Nonfarm Productivity and Wholesale Inventories are scheduled to be released in the afternoon. The Swiss Unemployment Rate and the German Trade Balance will also be published today in early trading.
Original Source: Daily FXGlobe