The markets closed last week with an anemic job data report, indicating that the US economy added only 22,000 jobs in August. Furthermore, revisions showed an actual job loss in June, spooking the market temporarily.
Still, the hope from the FED's action, which is now fully pricing at least 25 bps rate cut, has helped the broad market finish the week higher. While this development helped propel gold toward $3,600 per ounce, the US dollar has mostly erased the summer's retracement, marking a nearly 10% loss year-to-date. In the Asian currency market, the yen gave ground while the Australian dollar rose.
Looking ahead, the dollar will see more key news this week, with fresh CPI data landing on Thursday, while PPI data will arrive on Wednesday. This news will help the market determine further FED actions, or even speculate on a 50 bps immediate cut.
Key News
- Wednesday: USD - PPI
- Thursday: EUR - Rate decision, USD - CPI, Unemployment Claims
- Friday: GBP - GDP, USD - Consumer Sentiment
Pairs in Focus
1. CAD JPY
After rallying and failing to break the resistance at 107.800, this pair looks ready to make the next leg down.
CAD/JPY Daily chart, Source: TradingView
An optimal entry point would be on the pullback to around 107, with a target to take out the previous low. An optimal stop loss would be in the area above the previous swing high, giving the R:R of at least 1:1.3.
2. GBP SGD
After failing to break lower last week, this pair stalled at a key resistance level around 1.73800. However, given some Singapore dollar weakness, this resistance may soon give way.
GBP/SGD Daily chart, Source: TradingView
Thus, it is worth monitoring the previous highs and looking for a sign, such as a decisive day close above. Then, any pullback to the previous resistance becomes a viable setup for executing longs.
A potential target would be the swing high from June, sitting around 1.75400.
Notes
- AUD NZD: Despite failing to reach a high from earlier this year, as long as support around 1.0875 remains intact, the outlook remains bullish.
- AUD CAD: Turned bullish and is likely to take out the March high at 0.91300.
- AUD CHF: In the middle of an established channel between 0.51750 and 0.52900. The range has been persistent since mid-June.
- AUD JPY: Failed to break through the key level at 96.900 once again. The support sits around 96.00.
- AUD SGD: Short-term price action is bullish, indicating a weakness in SGD. An important level above the market is 0.84900.
- CHF JPY: Rallied and reached the price target at 185. A potential break above would mean a likely new all-time high.
- EUR AUD: Price held support at 1.78200. A short-term resistance is at 1.79335.
- EUR/JPY: Broke above the key level of 172.500, but since then the price has remained in a tight 100-pip range.
- EUR NZD: Overall trend is bullish despite short-term indecisiveness. A key support below the market is around 1.97550.
- GBP AUD: Showing the signs of bottoming, but remains in the broad range since April. A potential is to retrace 200 pips higher to around 2.08400.
- GBP JPY: Struggling to reach a key level of 200, yet holding support at around 198.200. A fundamental catalyst is needed for solving this range.
- GBP NZD: Pulling back after making a fresh yearly high. The key support below the market should be around 2.27800.
- NZD JPY: Turned lower after most likely establishing a lower high. Following a low point in August, the stage is set for a further decline.
Note: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article's contents. Readers may use this data for information and educational purposes only.
