Daily Analysis: Dollar Jumps on Strong Payroll and Wage Numbers

Friday Market Recap

Asset Current Value Daily Change
S&P 500 2472 0.01%
DAX 12307 1.25%
WTI Crude Oil 48.77 -0.52%
GOLD 1260.00 0.75%
Bitcoin 2840 2.99%
EUR/USD 1.1736 -1.17%

Jobs Friday is here, and market statistics say that the US Employment Report is the most important monthly release, causing the strongest volatility in currencies and the most durable moves in the case of a huge surprise. With that in mind the better than expected numbers might be enough to cause a meaningful correction in the most important trend of the recent weeks, the Dollar’s demise. Sure enough, the Greenback surged higher against its major peers, but the currency is still just slightly off its 2-yesr lows against the Euro, so there is ample room for a correction without endangering the underlying trend.

Non-Farm Payroll Growth in the US

Eurozone assets bounced back off their multi-week lows as the common currency got weaker, while US equities barely budged, with low summer volumes still being the dominant force. Stock volatility is near its historic lows, and even the intensifying bipartisan moves against Donald Trump aren’t enough to break the back of the Trump-Rally. That said, there is still apparent weakness under the hood, with only the mega-cap DOW index being able to march to new highs lately.  All the major currencies are losing ground to the USD, with gold also drifting lower, while oil being stable around the $49 per barrel level.

EUR/USD, 4-Hour Chart Analysis

Cryptocurrencies

The major coins have settled down after the Bitcoin Fork and bull market like price action continues, as investor confidence is back after the uncertainty. That said, some of the largest coins are still inside the correction patterns that developed following the historic spring rally, and a clear trend change is yet to be confirmed. Ethereum, Ripple, Dash, Monero, and Litecoin are all trading near important resistance levels, while NEM is already on the move. As Bitcoin Cash is losing market cap, we expect BTC to at least test the prior highs near $3000, with the long-term picture still being constructive for the most valuable coin.

BTC, 4-Hour Chart Analysis

Technical Picture

The DAX found support near 12,100 as the advance of the Euro stalled for a couple of days at 1.19 against the Dollar. The index remains stuck in a downtrend, but the short-term MACD is in oversold territory, signaling a likely correction towards the dominant trendline. Strong resistance levels are ahead near 12,375 and 12,500 but a durable bounce is possible if the Euro enters a meaningful correction.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA RBA Monetary Policy Statement
3:30 AUSTRALIA Retail Sales 0.3% 0.2% 0.6%
14:30 CANADA Employment Change 10,900 14,600 45,300
14:30 CANADA Unemployment Rate 6.3% 6.5% 6.5%
14:30 CANADA Trade Balance -3.6 bill -1.4 bill -1.1 bill
14:30 US Non-Farm Payrolls 209,000 183,000 222,000
14:30 US Unemployment Rate 4.3% 4.3% 4.4%
14:30 US Hourly Earnings 0.3% 0.3% 0.2%
14:30 US Trade Balance -43.6 bill -45.6 bill -46.5 bill
16:00 CANADA Ivey PMI 60.3 59.2 61.6

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
1:30 AUSTRALIA AIG Construction Index 56.0
7:00 JAPAN Leading Indicators 104.6%
9:15 SWITZERLAND CPI Index -0.1%
9:30 UK Halifax HPI -1.0%
10:30 EUROZONE Sentix Investor Confidence 28.3

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.