Dollar ticks up ahead of US nonfarm payrolls; Euro remains under pressure

Dollar ticks up ahead of US nonfarm payrolls; Euro remains under pressure

Posted on Thursday, October 5 2017 at 4:54 pm GMT+0000

Dollar ticks up ahead of US nonfarm payrolls
The Dollar ticked up during today’s session after the upbeat US non-manufacturing PMI data released yesterday.
I expect those gains to remain limited as investors will likely remained sidelined waiting for non-farm payroll data tomorrow.
Employment slowed after the hurricanes that hit the United States, which is normal and will be reflected in tomorrow’s data. The US employment report is expected to show a rise of 82000 new jobs versus a prior 156000.
Of course, a better than expected reading will boost the expectations of a third-rate hike in December, but generally given the current economic conditions and political uncertainty in the country, I do not expect the Fed to take such step before the end of the year.

Euro remains under pressure
The Euro gained on the back of a weaker dollar, rising from the 1.1695 level, but US non-manufacturing PMI data slowed the last rally.
However, political uncertainty in Spain regarding the possibility of Catalonian independence continued weighing on the euro.
Technically, the Euro fell below 1.1740, paving the way for a move towards 1.1650.
In the long run, I think we will witness tightening of the ECB monetary policy versus, which will push the Euro towards the 1.23 zone in the coming months.

Oil prices stabilized
Oil prices stabilized during today’s session waiting for outputs from the Saudi king’s visit to Russia.
It is noteworthy that the joint compliance from OPEC and non-OPEC producers in order to reduce supply was unprecedented, and this has contributed to the stability of prices since the beginning of the year. Extending this supply cuts agreement until the end of 2018 will contribute more stability and keep WTI prices between the level of 50 and 57 per barrel.
The recent rise above 50.70 will push prices towards 52.50 and 54.5.

Aussie tumbled after retail sales
After two consecutive days of gains, Aussie returned slipped back on weak data.
Australian August’s retail sales posted their biggest monthly fall since September. The figure declined by 0.6%, while analysts anticipated a growth of 0.3%.
This will place the possibility of an interest rates hike on hold in the near future waiting improvement in employment data and inflation.
Technically the market completed a bearish reversal pattern with the break below 0.7940 and now odds for a move towards 0.7730 had become strong.