So, according to most analysts today is the day when Fed’s monetary policy decision will be based on, the release of this first time, usually volatile and heavily revised NFP number. Over the past couple of months we have been seeing a real deceleration of employment growth with the hallmark coming on in May’s NFP release-at 35K and an almost flattening out unemployment rate. Going back to December we saw the influence that real sales and consumer spending had on job growth-according to Yellen, when she justified her reason for a rate hike last year, she based her arguments on an increasing Private Domestic Final Purchases-which was by then at 3.0% and accelerating more than GDP growth and represented at least 85% of the total aggregate spending in the economy. But unfortunately, since then retail sales has been decreasing and dragging down job growth with it. Check out especially motor vehicle sales for a general trend of consumer spending and overall retail sales. It should be noted that last month’s NFP was especially good with wage growth increasing by 0.3% and that got Vice Chair Fischer projecting good GDP growth in the next quarter and particularly pointing out how inflation is near its long term target and that the time for a rate hike should be imminent. Yellen reiterated the same last week at Jackson Hole and well, all this hawks got the USD on a rampage not until trends reversed this week and the NZD making a series of higher highs for the past couple of days.
To the charts now and where the summary of all these fundamentals are condensed and plotted, we see how the NZD has cleared yesterday’s minor resistance but then got into accumulation for after yesterday’s ISM Manufacturing Data release where it is now trending. Note that this is a resistance zone where price action has been trending the whole of August, check out the 4HR chart attached.
Chances are, if today’s NFP is positive, price will reverse and it is already showing signs of reversal if the current candlestick is taken as reference and break below support zones in the area marked within the 4HR chart and trend lower thereafter. The opposite might also happen and break the daily resistance trend line with target going towards the 0.75 mark.
I will plan my trade as follows and enter this in the 15 min chart before NFP depending on how the stochastics will be and trade:
Sell Limit: 0.729-0.731 initiate these positions when the stochastics are overbought within yesterday’s highs at 0.0-23.6 Fibonacci levels
Stop Loss: 50 pips from where you initiate your trade.
Otherwise have a good trading day and a nice weekend.