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Forex Trading Strategies Mixed picture as the dollars of the world are on a roll while EUR and especially JPY are weak. US employment data today may keep the action white hot.
We could see a strong US employment reading today - but will it trigger a stronger USD? Seems like we could see plenty more movement today.
MAJOR HEADLINES – PREVIOUS SESSION
• US ISM Manufacturing for November out at 58.1 vs. 58.0 expected
• US ISM Prices Paid for November out at 74.0 vs. 78.0 expected.
• US Natural Gas Storage was drawn -49 bcf vs. -50 bcf expected on winter heating demand and energy prices rose across the complex
• US Domestic Vehicle Sales totalled 12.4M in November as expected and vs. 11.4M in October.
• Australia Building Approvals were flat vs. a rise of 2.5% expected
• Australia House Prices fell -1.0% QoQ vs. a fall of -0.5% expected
JPY stayed weak overnight, even against EUR as EUR/JPY rebounded from yesterday's sell-off. GBP/JPY traded at a new 7-year high. The USD was mixed.
THEMES TO WATCH – UPCOMING SESSION
The market action yesterday was a wild ride indeed as the market first pummeled EUR and then swung the machine gun back toward the JPY and filled it full of lead as well. JPY has already traded at new multi-year lows vs. AUD, NZD and CAD - and yesterday we could add GBP to the list of currencies trading at multi-year highs vs. the JPY. Will EUR and CHF be next?
Again - it really feels like something extraordinary is going on this market - as the JPY flails out of control, stock markets spike higher, and gold trades up 14 dollars from the low of the day (!!). We're not sure what all of this means just yet - but we still prefer the USD weaker as the currency market is rather mixed here - with the "world's dollars" (AUD, NZD, CAD, USD) and GBP strong, while EUR and CHF and the poor JPY are all weak. Today may see either a continuation of this theme or a dramatic rejection. By the close of today, we may be able to regain our bearings and firm up our views going forward, as we've had a tough time with this market over the last couple of weeks.
We noted last month that the US employment data has lost some of its bite in recent months - only to see the employment figures trigger a massive buying spree in the USD on November 4. With the level of nervousness in the market, and the rangebound action we've seen for so long now, it seems we could see similar kind of action today - so very large moves are possible. With market reactions the way they have been lately (illogical according to fundamental news on the surface), the market may be looking ahead rather than back - so the strength/weakness of the data may not matter... But the employment data may be strong if we are to take some of the anecdotal indications from the Monster Employment Index released yesterday.
Note: the support/resistance levels used in the matrix’s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
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