Forex Signals Brief October 6: Watching the NFP After Mixed US Jobs Numbers This Week
Yesterday’s Market Wrap
Yesterday the economic calendar was light in the Asian and European sessions, with only the UK Construction PMI which slipped to 45 points, which means that this sector fell in contraction as well in September, following Manufacturing and Services PMIs. However, the GBP showed resilience nonetheless, as the USD retreated lower for the second day.
The weekly unemployment claims were released later in the US session and they came at 207,000, below forecasts of 210,000 claims for yet another month. Claims have consistently fallen short of estimates, and they are approaching 200K. The continually low number of claims runs counter to Wednesday’s lackluster ADP numbers.
Besides that, the US recorded a $58.3 billion trade deficit, compared to the $62.3 billion predicted. This is the lowest deficit since the epidemic, which it will immediately flow into Q3 GDP. US Treasury rates jumped further in response to the report, with the 10-year rising 3.6 basis points to 4.77% before retreating lower to 4.70 lows.
The Atlanta Fed will soon provide an update to its GDPNow prediction, which I expect will move beyond 5% from the current reading of 4.9%. Furthermore, a large number is becoming increasingly simple to believe. US Treasury rates jumped further in response to the report, with the 10-year rising 3.6 basis points to 4.77% from 4.71% before the data.
Today’s Market Expectations
Today the Asian and European sessions are light again, with the Average Cash Earnings from Japan which are expected to show an increase to 1.5% from 1.3% previously. German Factory Orders are expected to turn positive and show a 1.6% increase in September after a massive -11.7% decline in August, followed by the Swiss Unemployment Rate which is expected to remain unchanged at 2.1%.
Actually, the Japanese earnings figures will be critical for the Bank of Japan, as the central bank has repeatedly stated that it needs to see substantial pay growth in order to be confident in its ability to reach its inflation objective and, as a result, exit from monetary easing. Notably, the data has been going downward in recent months.
In the US session, we have employment reports from the US and Canada, with the unemployment rate expected to tick higher to 5.6% in Canada. The US NFP is predicted to show 171K new jobs gained in September, down from 187K in August, and the unemployment rate is expected to tick lower to 3.7% from 3.8% in August. The average hourly earnings will also be a significant measure to monitor, with a yearly increase of 4.3% as before and a monthly growth of 0.3% vs. 0.2% previously. Also, keep an eye out for changes as past months continue to be reduced lower.
Forex Signals Update
Yesterday the volatility remained high as we saw another retreat in US bond yields and the USD as well. Our strategy has been long on the USD, which has been profitable, but we were caught on the wrong side with a few trading signals yesterday during the pullback. But we also got back some so after all we ended the day with three winning signals and four losing ones.
The 20 SMA Keeping GOLD Subdued
Gold has been hitting lower highs since May, but the downturn accelerated two weeks ago, when it began tumbling lower, losing about $140 from late September highs. Gold has been trading in a range that we have been using with multiple Gold signals over the previous three days, albeit it did print a new bottom below Tuesday’s $1,815, when XAU/USD plummeted to $1,913.50.
XAU/USD – Daily chartÂ
- Gold Buy Signal
- Entry Price: $1,826
- Stop Loss: $1,812
- Take Profit: $1,834
Booking Profit in WTI OilÂ
Crude Oil was seeing some strong demand in recent week, but since Thursday last week after the US PCE price index report it has been on a freefall and sellers are jumping in. WTI crude Oil prices surged to $95 last week but fell below $85 (to a low of $84.21) yesterday as Oil lost more than $5 top to bottom on the day.
Despite the retreat in the US dollar and another major drawdown in EIA inventories yesterday, which declined by -2.2 million barrels against a -446M projection, the decline in Oil picked up pace. During the JMMC meeting, OPEC+ reaffirmed no changes to its output policy, with Saudi Arabia continuing its 1 million BPD supply reduction through the end of 2023.
EUR/USD – 240 minute chart
Cryptocurrency Update
 BITCOIN Can’t Hold Above $28,000
On Sunday, we saw another rebound in the crypto market, as the digital coins market has been in a mood swing over the previous few weeks, with Bitocin making a nice recovery after plummeting below $25,000 in September. Buyers failed to break over the 200 SMA, and we observed a bearish candlestick yesterday following a doji last, which is a bearish reversal indication. The price had been falling for a week, but in the last two days there was a strong rally that brought it to $28,555. Although the 200 SMA (purple) acted as resistance again, rejecting the price initially, so let’s see if buyers will be able to push above this MA.
BTC/USD – Daily chart
- BTC Buy Signal
- Entry Price: $26,248.2
- Stop Loss: $24,500
- Take Profit: $28,000
ETHEREUM Fwiling at the 100 SMA
Late last month, the price of Ethereum started increasing from the support, showing that there was a degree of purchasing interest and demand for Ethereum at roughly $1,600. Buyers have entered the region above this level on multiple times, but the 100 SMA (green) has been functioning as resistance on the daily chart. After Sunday’s surge, we saw a reversal at this moving average and yesterday erased all of Sunday’s gains.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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