March 13th Morning Brief – Optimistic NFP & Reversal in the Market

Posted Monday, March 13, 2017 by
Dave Green • 2 min read

Hello, everyone. I hope you are enjoying our trading signals on gold, forex, & the WTI crude oil. I am excited to share more trading opportunities. Before we proceed, let's have a quick look at the Non-Farm Employment change and the market reversal.

In the previous week, the US Bureau of Labor Statistics reported a growth of 235K jobs in February. Moreover, the unemployment rate edged lower to 4.7% from 4.8% in January. If you having trouble understading why there is a major sell-off in the US dollar despite having a positive NFP report, then let me explain some other aspects that are impacting the US dollar. 


Major Reason Behind a Sell- Off in the US Dollar

Priced In – Non-Farm Payroll

As we know, there is a positive correlation between the ADP employment change and the Non-Farm employment change. That's why traders kept their buying positions in the greenback and ultimately "priced in" the positive NFP. However, they eventually took profits by selling their positions at a higher price right after the release of positive data.


Average Hourly Earnings – Threat To Inflation

Despite having positive labor market figures, we have seen less growth in the average hourly earnings which increased just by 0.2% in February. This was below the expectations of 0.3%. To me, it seems like the increased job opportunities are resulting in lower wages and lower wages are not going to support the inflation targets. It increases the sentiment that the FED might reconsider it's rate hike decisions.


Major Events to Watch Today


  • Tertiary Industry Activity m/m (4:30)


  • Italian Industrial Production m/m (9:00)
  • ECB President Draghi Speaks (13:30)


  • Labor Market Conditions Index m/m (14:00)


Gold, the Safe Haven Asset

In the Asian session, gold was taking a breather above a major support level of $1204. Investors are cautious because of the central bank meetings in the week ahead. There are policy decisions due from the FED, BOJ, BOE and SNB. Besides that, investors are also monitoring the headlines coming out of the two-day conference of G20 central bankers and finance ministers in Germany for further clues on the health of the global economy.


Technical Outlook

The yellow metal has formed a test bar candlestick pattern in the 1- hour timeframe, which is demonstrating the bullish bias of investors. Let's look at the RSI (above 50) and the candles closing above 50 periods EMA, extending further support to the bullish gold.  

Gold Signal: Let's have a buying position above $1204 with a stop loss at $1201 and a take profit at $1208.70.


Silver, the Gold Correlated Metal

Similarly, the bearish trend in silver seems to get weaker since the investors are switching their investments to the bullion market before major economic events this week. At the moment, silver is trading slightly bullish at $17.02 in the early Asian markets. In the 1-hour chart, we can see a major breakout of the ascending triangle pattern. Now, the metal is likely to find a major support at $17.030, along with a resistance at $17.225.

Silver Signal: Investors are recommended to have buying positions above $17.020 with a stop loss at $17.950 and a take profit at $17.220. Guys, make sure to drag your stop loss at break-even once your position shows profits.

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