Last week we saw a substantial number of new jobs created in the US Non-Farm Payrolls report, which strengthened USD temporarily.
Why temporarily, and why might this be a problem?
Let’s take a look.
In today’s Market Outlook, let’s take a look at Forex trading on the Dow Jones Industrial Average, Brent Crude Oil, USD/JPY, USD/CHF and GBP/USD.
These numbers, for both Canadian and US new jobs, look like the exact opposite of last month.
This has called into question the accuracy of these numbers as you may remember, last year’s NFPs were proven to be 900,000 jobs overestimated.
We can take advantage of this uncertainty.
Also, the current US administration, Donald Trump, is excited about these high numbers but what he doesn’t seem to realise is that the Fed will almost certainly raise interest rates on 16 September.
Get ready for the fireworks!
Getting back to reality: before any event, it’s a great idea to understand the market, and here we see the support and resistance in pairs like GBPUSD.
Also, Fibonacci shows us just how strong the 50% level is.
Here, on the 15-minute GBPUSD chart, we see the usual market movement of about 50 pips after the positive news.
Buyers liked this and got back into the market or increased their positions, and the stochastic oscillator picked the reversal.
And, as you have seen in our News Catalyst Fade method, the DI- of the ADX picked the bottom perfectly.
We see that we are still in a ranging market on USDCHF.
Here, as well, on the 15-minute chart, we saw a whipsaw of about 50 pips and, again, our technicals picked the top of the movement.
But, what happened here on USDCHF, where we had the opposite opportunity?
The answer is JPY.
The Yen is stronger right across the board, and every JPY pair looks like this.
18 September, the BoJ is expected to raise interest rates, and most analysts believe we will see continued JPY strength until then.
We need to look at crude oil, of course, with the increased aggression in Iran as Brent Crude is looking at $100.
No shorts, please, until we see some good news.
And, after the good NFP numbers, the threat of increased interest rates, and the increasing price of crude oil, the Dow Jones Industrial Average has fallen, opening with a gap to the downside yesterday.
Keep in mind, yesterday was a holiday in New York, and traders and investors will be back at it today.
And, stay on the lookout for a TACO trade regarding the crazy US tariff wars!
