Dollar Bulls Poised To Charge
Blackwell Global | Jul 02, 2015 04:44AM ET
Volatility will be the name of the game as US nonfarm payrolls are due for an early release. A technical setup combined with an expected positive result sees the dollar bulls staring at a red flag ready to charge.
The US Nonfarm payrolls are due out tonight (Thurs 2nd July) thanks to the US observing Independence Day tomorrow because it falls on Saturday. This is going to increase volatility more than usual because we essentially have two days of trading crammed into one day with nonfarm, the single biggest event in the forex calendar, thrown into the mix. The market is expecting a result of 232k, but I would not be surprised to see it come to the upside of that.
Unemployment claims have been beating forecasts with three out of the four results in June coming in better than expected. Also we have not seen a result over the 300k mark since March which shows the relative strength in the US Jobs market. Add to this the fact that summer has begun and the seasonal jobs that will be included in the labour results could add a nice little boost to the figure.
Earlier this week the CB Consumer Confidence figure pushed back over the 100 mark at 101.4 after dipping in April and May. When consumers feel good, they spend which creates jobs. The manufacturing sector has had its own strong results with yesterday’s ISM Manufacturing PMI lifting from 52.8 to 53.5 and when manufacturers expand they hire people. So some good results in June are likely to see the nonfarm result come to the upside and the move is likely to be a sharp one.
From a technical perspective the index looks to be breaking out of the pennant shape which could lead to a large bullish run. The pennant shape has been forming since the swing high in early April that failed to push beyond the top of the previous bull trend. The swing low in May is the beginning of the bottom line of the shape that the index has been consolidating above.
A double bottom on the daily chart also confirms a reversal of the recent short term downward trend. The two points of the double bottom form the bottom line of the pennant and a higher low is a good sign the tide is turning. A breakout of the shape looks like it is underway already, but we may see a pullback to the shape and it act as support. From there look for a larger extension higher that will target resistance at 96.993, 97.842 and 98.975.
The US dollar looks set for a bullish push out of the technical pattern that has formed on the daily chart. An increase in volatility thanks to nonfarm payrolls could see that happen rather quickly.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.