Positive Data Fuels Opening Week Rally

This week is the first full trading week of Q3 and things are going well on Wall Street. At the midway point of the U.S. session, the DJIA DOW (+335), S&P 500 SPX (+42), and NASDAQ (+207) are all in the green. Safe-havens are also catching some bids, with the Swiss franc and GOLD leading the way. For now, it looks like no one is interested in holding the USD as positive economic data keeps rolling in.

During the U.S. early session, several reports were released to the public. Here are the highlights:

Event                                                                               Actual              Projected         Previous

ISM Non-Manufacturing PMI (May)                              57.1                      50.1                  45.4

Markit PMI Composite (June)                                         47.9                     46.8                  46.8

ISM Non-Manufacturing Employment Index (May)    43.1                      30.7                31.8

The headliner of this group is the spike in the ISM Non-Manufacturing PMI. The 11.7 point month-over-month gain is rock-solid, suggesting recovery. This is another strong data set, suggesting that a robust economic recovery is well underway. Now, the only question is whether or not the U.S. will lockdown for a second time as confirmed COVID-19 cases grow. 

Strong Economic Data Prompts Modest Action In The USD/JPY

After a bullish early forex session, the USD/JPY has reversed course. Rates remain in a noncommittal area for the third consecutive trading day.

Here are two levels to watch for the near future:

• Resistance(1): Bollinger MP, 107.57
• Support(1): Daily SMA, 107.22

Bottom Line: Tight trading conditions can be positive given the correct data-dependent strategy. In the case of the USD/JPY, a scalping setup may come to pass if rates fall to the Daily SMA. Until Tuesday’s closing bell, I’ll have buy orders in the queue from 107.26. With an initial stop loss at 107.09, this trade produces 12-15 pips on a rejection of the 107.25 quarter-handle.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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