The USD trading range ahead of NFP

June 5, 2017

The USD trading range ahead of NFP

The USD traded sideway against all of major currencies. Better than forecast ADP Norfarm and ISM Manufacturing PMI prevented the USD dollar from going down further. Private sector employment increased by 253k jobs while Manufacturing PMI reached 54.9 versus 54.7 of expectation. The Euro struggled to overcome 1.1250-1.1270 area and The Pound continued trading below 1.2900 level. Investors are watching NFP that is released today. If NFP number is better than forecast, the worry about hawkishness will be removed. This implies the USD dolllar will go higher. In the contrast, USD will be under selling pressure against all of major currencies.

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Infact, it is likely that the Fed will raise its policy rate next month. The probability of rate hike goes higher ahead of NFP approximately 91% because of better ADP Norfarm data.

AUD and NZD under pressure

The Aussie felt below 0.7400 on the back of weaker of Chinese Manufacturing PMI. AUD/USD started trading day well with retail sales rebounding to 1%. But the Aussie sharply dropped below 0.7400 level when the Chinese Caixin PMI was released at 49.6 versus 50.1 forecast.

The Kiwi traded lower against USD but still kept its strength above 0.7000 level. Our strategy is keep short selling the Aussie below 0.7500 level.

EUR faced its resistance, GBP traded below 1.2900

The Euro still in trading range 1.1090-1.1270 after reaching its high near 1.1270. Buyers struggled to overcome 1.1240 yesterday. The Euru dropped back to 1.1200 level due to the USD's rally in US trading time. The momenttum still favors the bulls. Howerver, the EUR can take a correction if US data is released better than forecast.

Last week's break of channel support suggests more losses for the Pound. 1.2900 level becomes the Pound's resistance. We stay on the sideline for GBP at the moment.

Trading Strategies Reference

We recommend to keep short selling the AUD/USD below 0.7500 with stoploss 0.7610.

Pair Trend Strategy Stoploss
EUR/USD Up Buy on dip
GBP/USD Range None
AUD/USD Down Sell below 0.7500/target 0.7300

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The analyzes and forecasts only reflect the opinion of the market research department at the time of issuance and do not constitute an offer to buy / sell any securities.

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