The US Dollar was back in control over the major instruments over the past 24 hours and is seems that traders are starting to build their pro-Dollar positions ahead of the NFP report on Friday. We’ve spent this week talking about the significance of the report and what it’s outcome for the Dollar could be and indeed traders are now starting to prepare their portfolios for this event.
The Dollar recorded gains against all of the Dollar-denominated instruments that we monitor in this newsletter weighing down on the Euro, the Pound and Gold while the FTSE 100 has reversed its flows to the upside after the recent downtrend. The way the London index is trading might not be in sync with the rest of the markets as a strong jobs report from the US would theoretically pressure the global stock markets lower so we need to be on top of it until its outlook clears out.
Taking a look at the price action yesterday, the Euro declined below the 1.1200 support after a failed attempt to do so a day before. The Euro finally succumbed to the pressures that the Dollar is exerting and this morning the Single currency is trading around the 1.1150 area. The next support area lies around the 1.1100 level and we could see a further extension of the losses to this level ahead of the NFP report.
The Cable on the other hand remained on the same chapter edging lower once again but only slightly as the currency is extremely oversold after almost 2 full weeks of losses without a single correction. The outlook of the Cable at this time seems mixed as the technical in the sense that a correction is almost demanded by the oversold state of the currency pair but no one seems willing to bet in favor of the Pound ahead of the NFP report so caution is advised.
The focus today will be all around the FX universe as there is a host of tier-2 reports heading our way. From Europe we will receive fresh data on the PMI levels around the continent while the UK Manufacturing PMI is also scheduled for release today. Later in the day the US will release its own Manufacturing index and the Initial Jobless Claims levels but at any case we advise caution ahead of tomorrow’s important NFP event and keep your trades short-term focused.
Economic Calendar
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