Today will see the release of US economic data points average hourly earnings, non-farm payrolls, and the US unemployment rate, which could materially affect the US Dollar.Top Regulated Brokers
The main item in the market today will probably be the release of key US economic data, notably average hourly earnings which is closely watched by the Fed as a leading inflation indicator and is expected to show a month-on-month increase of 0.3%. Non-farm payrolls might also have a material effect. Higher than expected numbers will lead to expectations of a more hawkish Federal Reserve, and as such would likely boost the US Dollar which recently made a new 13-month high, possibly giving an impetus for a major bullish breakout. Conversely, lower than expected numbers could push the Dollar back into its former consolidation zone and kill the breakout.
The USD/JPY currency pair is falling after making another new 39-year high price yesterday, possibly as a result of the Japanese Finance Ministry briefing Reuters that it could intervene without warning and cause massive losses to speculators. I see this as just another threat. The Japanese Financial establishment is trying to hold back a tide and that is a hard thing for any central bank to achieve. It is easy to weaken your currency but not to easy to strengthen it. One approach for traders might be to wait for intervention to drive the price substantially lower, and then to go long here when the price starts rising - this would have been very successful after the last intervention. Alternatively, trend traders can buy the breakouts and control their risk - it is unlikely that the Yen could rise by more than 3 long-term daily ATRs in a day, or at least, not by much, so don't be too intimidated by these threats if you are using a wide stop loss.
Crude Oil is continuing to trade lower, much to the satisfaction of President Trump, who is managing his Iranian headache just enough to get the price of oil down. WTI is trading below $67.50 today at a fresh 4-month low, and its price action is quite bearish. I never short commodities, but those trend traders who do will likely be short here.
Bitcoin is showing some weak and tentative signs of finding support below $60k and is trading above that level again. However, this is far from conclusive, as it could easily fall to fresh long-term low prices below $58k.
Precious metals such as Silver and Gold are showing similar behaviour to Bitcoin but are putting in more substantial bottoms and rising more firmly. Also here, it is premature to call a bottom, but it might be starting to happen.
Equities remain mixed. It might be worth noting that contrary to the "sell in May and go away" cliche, July has been the strongest month for the American stock market for many years.
In the Forex market, the US Dollar is consolidating below its recent 13-month high, awaiting the key US economic data I mentioned earlier for more direction. The EUR/USD pair is in focus as trend traders will be looking to be short here as it falls again after making a new 14-month low last week. Trend traders will already be long of the USD/JPY currency pair as I explained in my first point.
Yesterday's release of ISM Manufacturing PMI data was slightly lower than expected.