Thursday. The day before the US NFP data. Not normally the most exciting of days as traders await the big event.

The day started out quietly for FX with EURUSD mustering a whopping 6-point range in Asia. Europe managed to get things moving a little more, but as I sit down the majority of major currencies are only a few points removed from the NY close.

The exception would be equities which received a boost as the Chinese government announced a tariff reduction of 50% on about $75 billion worth of US goods. The Nikkei rallied 2.3% while the Shanghai Index and Hang Seng also registered impressive gains. For the DAX there would be gains of just under 100 points.

As mentioned, Thursday’s before NFP data can often be quiet. But the US session would at least liven up on the FX side.

EURUSD broke the 1.0980 support I have been highlighting in my technical section, making a low of 1.0965, although would trade back to 1.0980 by the NY close.

GBP continued to probe lower levels, dropping from 1.3000 to 1.2920 and USDJPY briefly touched 110.00 as USD strength prevailed for the second straight day.

XAU also gained for the second straight day rallying to 1,568. This is not safe-haven buying but more of a yield play as US yields struggle to rally.

Wall Street would open higher with the DJ up over 100 points. A brief dip did see those gains wiped out but had recovered to +80 points by the close for a new record high. The S&P and Nasdaq both closed higher, although the Russell 2000, an index I did highlight recently, lagged down 0.27%.

Uber announced their results after the bell, recording a cheeky $8.5 bio loss for the 2019 fiscal year. That was ‘good’ enough for the stock to rally over 2.5% in after-hours trading. Go figure.

All eyes now turn to 8:30am EST Friday morning for the US NFP numbers. Wednesday’s ADP data has traders hopeful for a big number. +160k appears to be the average of economist’s forecasts.

Showing technicals before arguably the most significant data release of the month can be a bit of a lottery. Get a much better or much worse release and we can slice through the best of technical indicators in quick time.

So I’m going back to XAUUSD. As mentioned, despite the continued rally in equities and the USD, Gold has found a base sub 1,550 and looks determined to try elevated levels. Yes, it will be dependant on Friday’s data. And yes, you need to keep an eye on that rising trend line we broke through earlier in the week.

That support now becomes resistance and as you can see from the chart, we stopped just shy of there. Break back above and we could be looking at revisiting the highs from earlier in the month.


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David Hannigan
Author

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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