Last week’s NFP was the lowest in 10 months and while some of the slow down might be pointed to the brutal weather, it is worth noting that general employment status is decelerating and weak to say the least. At 98K jobs recorded plus some more 38K jobs revised from last month’s NFP, the economy is hinting of a weakness that needs to be addressed. There might be some hope though, average hourly earnings remains flat at 0.2% while unemployment contrary to expectation ticked lower to 4.5%. This combination of year over year increase of earnings roughly at 2.7% coupled could somehow boost inflation as money is spent on consumption and investment which will again create some employment. If you have been keen enough, you should note that inflation-CPI for the 3 sessions were above the Fed’s target of 2%. Most importantly though is the rate at which the core CPI has been expanding, it grew by 2.2% and remains at the highest level since the credit crisis. Across the border to Canada, housing data shows some expansion. More housing units were being built and even more being availed for rental purposes in major cities across Canada and this should bring some bullish sentiment to the CAD if technical consideration is also brought in.
Today, I would like to trade the GBPCAD pair and look to off load the GBP. My reason for this is technical and also fundamentally motivated. Remember the issue of Brexit might have some negative ramification for the GBP. I also saw this from a technical point of view and noticed that there is a sell signal that has been printed in the weekly chart. Such signals are rare and either in-trend sell or buy signals forms only once or twice a year. At the moment though, the GBP is heavily bearish since the beginning of last year and a sell signal has been printed. Look at that 3-bar reversal pattern that formed in February-March period which looks likely to be confirmed this week.
Trade this as follows:
Stop Loss: 1.6710
Take Profit: 1.6200-support zone in the weekly chart.
In the London Session today, let’s watch out for the UK CPI expected to remain flat at 2.3% on a year over year basis because of a potential slow down in monthly growth forecasted at 0.3% in March.
Note on the same vein, look to buy the NOK.