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US FX Market Open – Friday, December 2, 2016: Position adjusting ahead of NFP data

Posted by Marge Maresca on Dec 2, 2016 7:17:43 AM

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Overnight Events

• USD/JPY -0.2%, EUR/USD -0.18%, GBP/USD +0.2%
• DXY +0.08%, DAX -0.95%, Brent -0.85%, Iron +0.15%
• CH Q3 GDP 1.3% y/y vs 2.0% prev, 1.8% exp
• EZ Oct Producer prices vs -1.5% prev, -1.0% exp
• UK Nov Construction PMI 52.8 vs 52.6 prev, 52.2 exp
• Turkey Pres. Erdogan-people should convert FX into Gold and TRY
• Erdogan says no option but to keep cutting rates – Rtrs
• USD/TRY hits a new record high of 3.5525
• Russian CB Gov-next rate cut not probable before Q1 or Q2
• Jpn seen cutting tax view in test for Abenomics – Nikkei
• Jpn Nov monetary base +22.2% y/y to Y419.84 trln, record high
• Jpn unions look to keep wage demands at ’16 levels – Nikkei
• CBA issues Y20 bln ’26 subordinated notes – Rtrs
• PBOC CNY fix 6.8794 vs USD, yesterday 6.8958
• HKMA – Yuan depos see noticeable drop in first 3 wks Nov – Rtrs
• Australia Oct retail sales +0.5% m/m, +0.3% eyed, Sept +0.6%

Currency Summaries

EUR/USD
• EUR/USD drifts lower in Europe 1.0636-1.0688
• Asia 1.0658-1.0690. Taper talk boosted bund yields
• Yields ease slightly today. 10 yr UST/bund 209bp from 206bp
• EZ producer prices way above f/c 0.8% Oct vs 0.2% & prior 0.1%
• Vols up steeply but more so Italy risk over US data
• O/n ATM straddle is 135 pips twice what's usually priced for payrolls

USD/JPY  
• Despite correction, bull cycle intact for 115.00
• Said to be large option barriers @115.00, decent stops clustered above
• Spot fell early in Asia from 114.20 to 113.58, before consolidating
• Long liquidation cited for the drop in Asia
• Also offered due to position adjustment also reason for fall pre US NFP
• Japanese investors and importers remain in buy dip mode ahead of 113.50

CHF
• EUR/CHF eyes 1.08 level but might not have legs for 1.0816 Wed high
• At the top of a bull run but Thurs hammer still underlines bullish intent
• SNB growth/CPI/CHF job underlined by data: Q3 GDP slows significantly
• Annual pace of 1.3% vs 2.0% Q2
• USD/CHF big up day Thurs and gain consolidation early
• GDP noted but U.S NFP the focus: Chart: http://reut.rs/2fYVRLW

GBP/USD
• GBP/USD 1.2594-1.2648 range in Europe
• Downside bias chiefly driven by paring of positions ahead NFPs
• UK construction PMI improves but ignored for the time being
• Construction PMI 52.8 in Nov from 52.6 and f/c 52.2
• Key services PMI Monday is seen 54.0 from 54.5
• GBP/USD 55-DMA 1.2509 & 100-DMA 1.2804 may shape coming ranges

USD/CAD
• Fell 1.3439 - 1.3300 Thurs and 1.3286 today
• Weight from Oil rally since non OPEC also announced production cuts
• Oil gains peak for now - Light crude to 51.80 Thurs vs 45.22 pre OPEC Wed's
• 9 Nov low 1.3265 supports USD/CAD. Break opens 1.3220 daily cloud top
• 1.3319 todays high, Falling 21hma caps for now at 133.17
• NFP awaited - O/n options pricing 82 pips break even for atm straddle

AUD/USD     
• 76.4% fib of 21-29 Nov rally 0.7311-0.7497 supports at 0.7355
• Thurs low 0.7369 initial support. 1bln expiries below at 0.7320
• Todays range 0.7401-33, Hourly cloud top flat 0.7436 resistance
• NFP awaited - Monday vol is 11.0 or 59 pips break even
• Rest of vol curve drifts lower to highlight range bound spot market
• Tuesday is RBA, but nothing expected - related vols minimal premium

NZD/USD
• 0.7105-0.7044 fall Thurs, 0.7086-0.7102 paltry range today
• Y/days high and hourly cloud base 0.7105 initial resistance
• Hourly cloud falling to add weight. 21dma above at 0.7125
• Minimal resistance thereafter until Wed's 0.7170 peak
• NFP awaited - Monday vol 12.0 which is a break-even of 61 pips
• AUD/NZD within Thurs 1.0406/89 range: .Wed's 1.0499 hi/daily cloud base cap

Today’s events

An expiring FX option heading into the New York Cut, if close enough to the strike price, can act as a magnet for selling/buying.  If the option is large, it can generate enough trading to move the market.  

Option Expirations(Source:ThompsonReuters)

• Monday vols bid over NFP, but EUR pairs exceed due to Italy ref' premium
• EUR/USD approx' mid rate 17.5 vol or 135 pips break even
• USD/JPY 16.5/136 pips, EUR/JPY 20.0/175 pips, GBP 11.0/100 pips
• EUR/GBP 15.0/92 pips. EUR/CHF 11.0/85 pips, USD/CHF 13.0/95 pips
• AUD/USD 11.0 or 59 pips, NZD 12.0/61 pips, CAD 8.5/82 pips

Economic Data (GMT) - (Source:ThompsonReuters)

• 13:30 CA Nov Jobless rate mkt 7.0%, 7.0% prev
• 13:30 CA Nov Employment change mkt -20k, -43.9k prev
• 13:30  Nonfarm Payrolls Nov mkt +175k, prev +161k
• 13:30  Private Payrolls Nov mkt +165k, prev +142k
• 13:30  Manufacturing Payrolls Nov mkt -3k, prev -9k
• 13:30  Unemployment Rate Nov mkt 4.9%, prev 4.9%
• 13:30  Average Hourly Earnings Nov mkt +0.2% m/m, prev +0.4%
• 13:30  Average Workweek Hours Nov mkt 34.4, prev 34.4
• 14:45  ISM-New York Business Conditions Idx Nov prev 49.2
• 18:00  Baker-Hughes Oil Rig Count weekly prev 474, +3 w/w, -81 y/y

Events, Other Releases (GMT) - (Source:ThompsonReuters)

• 13:45  Fed Governor Brainard welcome remarks at event on online lending
• 14:00 Turkish Econ Coordination cmtte to meet: TRY fall likely topic
• 16:45  FedTrade operation 30-year Ginnie Mae max $1.500 bln
• 17:30  FRB Cleveland's Mester at financial markets conf; Washington, DC
• 18:00  Fed Gov Tarullo on post-crisis financial regulation; Washington, DC

 

Topics: US FX Market Open

 

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