Trading plan for 03/11/2017

Much data, but little reaction. EUR/USD is located around 1.1660. USD/JPY is around 114.00. On the shoulder is still a pound: GBP/USD only slightly bounced over 1.3050. The Australian dollar, which loses nearly 0.5 percent after the next apparently disappointing retail sale, is the most neglected currency.

On Friday 3rd of November, the main event of the day is Non-Farm Payrolls data release from the US with the rest of the US job market data. Moreover, Canada will release Unemployment Rate and Employment Changes as well.

EUR/USD analysis for 03/11/2017:

The Non-Farm Payrolls, Unemployment Rate, Average Hourly Earnings and Participation Rate are all scheduled for release at 12:30 pm GMT. Market participants expect a huge increase in Non-Farm Employment Change number, from -33k to 312k, but a steady unemployment rate at 4.2%. The earnings are expected to decrease from 0.5% to 0.2% on monthly basis and from 2.9% to 2.7% on a yearly basis. Hurricane disturbances have had a strong impact on the September labor market report and we will now see corrections of those readings. This means a sharp jump in employment, but also a slower rise in wages. The second thing is more important for the US Dollar, but only a big disappointment can hit the course. As the Fed’s December rally seems unlikely, the market is more likely than the data to show progress in the fiscal policy. The strong jump in wages in September was justified by the increase in hours spent working on reconstruction work in regions affected by hurricanes Harvey and Irma. Now, when the ratio between regular pay and overtime is normalized, it will lower the rate of pay. For the Fed, direct inflation readings are more important, but weaker wages may weaken the market’s estimate of the December rate hike. With a probability of 80% at 6 weeks before the decision, it is possible that after the worse data the market will lower the valuation. This would hit the US Dollar, but in a somewhat limited way, because, firstly, one report from the labor market is not enough to dissuade the Fed from a hike. Secondly, the market has recently underestimated macro data from the US, being more focused on the progress of the tax bill and the election of a new president of the Fed.

Let’s now take a look at the EUR/USD technical picture at the H4 time frame. The market tried to break through 38% Fibo retracements at the level of 1.1674, but failed and got back to the horizontal zone. Currently, the price trades at around the level of 1.1650 as the market awaits the NFP data.

Market Snapshot: DAX at new all-time highs

The price of German DAX had made a new marginal high at the level of 13,503 points and still trades above the golden internal trend line support. Only an impulsive breakout below the technical support at the level of 13,336 would change the bias from bullish to bearish and this situation might occur soon as the market conditions are extremely overbought.

Market Snapshot: USD/CAD falls out of the channel

The price of USD/CAD has fallen out of the golden channel and now trades close to the technical support at the level of 1.2777. The level of 1.2919 had been tested already, so any worse than expected Canadian job market data might push the prices below the technical support towards the next support level at 1.2662.

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