Today is the Non-Farm Payrolls day, a day that carries an increased risk to investors but could provide greater than average opportunities to traders. Presuming of course that traders don’t bet the farm and understand how to time the market. Otherwise, increased volatility is likely to mean increased losses. For  traders with the skills needed, increased volatility means greater potential for markets moving to trade entry levels and then bouncing back to create profits. This is why volatility is so important. If prices don’t move, no one can profit. So it follows that the more price movement there is the greater the potential for profitable trading. Now the question is: do you have the skills needed to trade successfully? Join our VIP Black program here and learn to better manage trading risks, time the market with greater accuracy and to manage your emotions more effectively. You see, trading is a business and should be treated as such. Otherwise, it’s just a hobby and hobbies tend to cost money. 

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EURUSD continues to battle a resistance at 1.1850 or so. Supports and resistances are rarely exact pip-levels. Rather they are areas but for the sake of simplicity, we refer to 1.1850 level here. EURUSD had a strong rally earlier and it’s only natural that it will take a breather while traders try to figure out if there is still enough momentum to take this market higher. Near-term support can be found at 1.1695 while the upper end of this recent consolidation range is at 1.1909. The nearest Fibonacci retracement level (23.6%) at 1.1737 is not that far away from the 1.1695 support. And the fact that a rising trendline (drawn from July 10th and 17th lows) also coincides with this level gives us a reason to believe that this level is likely to be watched by a number of traders. Therefore it can be said that we have a confluence area that should be monitored today. 

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The analyst consensus expectation is that there will be 1550K new jobs outside the US farming industry. It seems likely that seasonal adjustments related to the employment cycle of teachers will have a strong impact (850k jobs) on today’s number. Making educated guesses about any government statistics is always challenging but this time the usual indicators such as the number of unemployment claims (1186K, 1410K expected) are clouded by Covid-19 related unemployment benefits. The US government has been paying $600 per week in extra benefit to those seeking for work. ADP jobs number came in as low as 167K but it’s well known that the jobs numbers from ADP are a little patchy and thus not a great indicator of the government NFP number. The number of people claiming unemployment benefits came down a bit but still, there are over 31 million Americans depending their daily lives on this benefit. That’s not an insignificant number. 

The trade data from China suggests that the exports in USD terms have risen by 7.2% while a 0.6% drop was expected. This should have been good news to the Australian dollar but the currency has declined against the dollar in today’s trading. This suggests that market participants do not trust Chinese data. The Reserve Bank of Australia’s quarterly monetary policy statement contained no surprises. The bank is not considering negative interest rate policy and sees a slow recovery with higher unemployment ahead.

China-US tension continues as President Trump signed an executive order targeting Chinese TikTok and WeChat services. TikTok must allow Microsoft takeover within 45 days otherwise it will be banned from operating in the US. These platforms have become so popular in the US that the government sees them as risks to national security. 

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Recent macroeconomic data

  • Chinese Manufacturing PMI: 51.1 (50.8 expected)
  • US Manufacturing PMI: 54.2 (53.6 expected)
  • Canadian GDP 4.5% (3.5% expected)
  • NZD unemployment rate 4.0% (5.6% expected)
  • US ISM Services PMI 58.1 (55 expected) 
  • US Markit Final Services PMI 50.0 (49.6 expected)
  • ADP Non-Farm Employment 167K (1200K expected)
  • US Unemployment claims 1186K (1410K expected)

Macroeconomic releases today 

  • China Exports +7.2% y/y (-0.6% expected)
  • Canadian  unemployment rate 11.1% expected
  • US Non-Farm Payrolls 1550K expected
  • US Average Hourly Earnings -0.5% expected
  • US Unemployment rate 10.5% expected 

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