So from yesterday’s ADP private payrolls data, USD bulls had something to celebrate. Against all the negativity of how hurricane Irma and Harvey could affect labor, 135k jobs were actually added. At the same time, the number of people claiming benefits declined by 20K to a seasonally adjusted 260K and is the 135th week in a row where the number is below 300K. If the 4 week moving average is used to smooth out the usual volatility, then data shows a decline of 9,500 from an average of 250K.
This is good news for the green back and optimistic investors should expect NFP numbers to surprise many tomorrow. Economist expect a transient 90k jobs to be added with affected areas as Texas, Virgin Islands, Florida and Puerto Rico dipping below averages. By the way, unemployment claims data points to marginal increase in these areas with the number of people already in the scheme shooting up last week. The USD was also boosted by that rapid expansion in the service sector as yesterday’s data shows. Because of this, you will notice a cross-the-board USD appreciation even in the cryptos world.
Fundamentally, I expect more sell pressure on the GBP. For those not in the loop, the BoE are over the head hawkish and compared to the Feds, a 40% probability has been assigned to the central bank to hike rates at least two times over the next 6 months. All in all, the recent raft of negative economic data and political grandstanding won’t help the GBP. This is why, despite the apparent hawkish stand, I will buy the Kiwi and while at it, earn some positive swaps.
In the weekly chart, there is a stochastic sell signal and candlestick sell pressure over the past 2 weeks. I’m a bear especially if this week’s ends up as bearish. I will try to keep this simple and doing so will help you notice that break below that steep support trend line. At 1.86, this level was retested before bears continued lower.
I will enter short next week, and place my stop loss at 1.86 or there about and aim for 1.79 which was Q3 2016 resistance level.
This is just a heads up for next week.
Have a good trading day.