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September 3, 2016

Trading signals for next week. August NFP review.

Trading signals for next week. August NFP review.

  August NFP review.

US Labor department released yesterday its monthly account on the health of US Labor market. The report showed jobs growth averaged 151K, 29K less than medium analysts projection, almost twice weaker than in July (275K). Unemployment rose by 0.1% to 4.9%, while month-to-month change in wagers averaged 0.1%, missing 0.2% projection.

Traders hoped this NFP will shed light on FED plans regarding September rate increase but seems it rather throw the case into more confusion than before. Currently futures on the rate hike indicate the odds have dipped to 21%, while the balance of views on December rate hike also changed in the favor of “no-change” forecasters:

September rate

 

December rate hike

 

Nonetheless, US Dollar remained quite stubborn to the headwinds caused by weak data and managed to erase post-NFP dip:

USD Index:

NFP hike

 

Limited response on weaker-than-expected NFP data could suggest that markets keep bullish outlook on US Dollar, expecting rate increase in September. For example Goldman Sachs analysts estimate September rate hike at 55% though other banks and investments firms are less optimistic on this case. On US Bond market the yield on US treasuries fell reflecting lowered expectations on FED tightening in September while Gold also added in value sparking uncertainty on the markets.

Based on this data, US Dollar is expected to extend retracement in the next week as large investors will start to adjust their positions and limit risk exposure according to a new data. US Fed’s Williams speech on Wednesday is also expected to bring some clarity on FED intentions, together with the FED Beige Book to be released same day.

Although as the date of September FOMC meeting approaches it is likely to see a rebound on US Dollar as market outlook.

Next week trading calls:

GOLD (XAUUSD)

The bullion is expected to grow futher to $1,340 level where it meets two week resistance. So its preferred to open BUY position, lot size – 0.2 lot, TP $1,340, SL –  1,315.50.

GBPUSD

Consistenly positive data on UK economy, easing concerns over Brexit consequences together with projected Dollar weakness for next week will likely to push the pair for a new height. Considering that the pair is still in bottom after Brexit it’d be reasonable to try a bullish play, focusing on 1.34 level. The signal on GBPUSD is BUY – Target 1.34 level, SL 1.3220

That’s it for today.

Leave your questions in the comment box.

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