Forex trading plan for August 7
By Elizabeth Belugina
US dollar remains strong vs. other major currencies. Traders are rather positive about the upcoming release of the American Non-Farm Payrolls (NFP) figures on Friday, at 12:30 GMT. Consensus forecast is that American economy has gained 220-225K jobs in July, while unemployment rate remained unchanged at 5.3%. If the reading comes between 200K and 220K, US dollar will be OK, though there may be a negative short-term reaction. A reading below 200K will provoke USD selloff, while NFP around 250K will make the greenback broadly strengthen.
EUR/USD remained above 1.0900. The pair is trading between 1.0950 and 1.0850. Good NFP will make the euro decline towards 1.0800/1.0750, but if US data disappoint we will see a spike towards 1.1050/1.1100. There will be some figures in the euro area, but America will remain in the center of market’s attention.
The super Thursday for British pound did not leave up to expectations. GBP/USD slid below 1.5550, but found support in the 1.5460 area (July 24 low). Only one MPC (Monetary Policy Committee) member voted for the rate hike vs. at least two expected. In addition, the Bank of England’s Governor Carney has mentioned low commodity prices and said that higher sterling affects inflation. However, fundamentally the central bank’s position did not change much. Rate hikes around the beginning of the next year is still on the table. Cable fell because the expectations of the market fueled by the previous Bank of England’s comments were too elevated. There are some positive technical signs like the 100-day MA turning up, so the battle is not lost for the pound in the longer-term. On Friday, however, it will all depend on the US NFP. A strong reading will send GBP/USD to 1.5300, while a weak one will allow it to test levels above 1.5700 with potential target at 1.5800. There is also support in the 1.5400 area (200-day MA).
USD/JPY remains just below the psychological level of 125.00. The Bank of Japan will meet early on Friday. The central bank will likely maintain its monetary stimulus program and upbeat assessment of national economy. Note that the central bank would not like to see the pair above 125.00. Still, in case of strong NFP USD/JPY will surge to 125.75/126.00. The disappointment, however, may provoke a decline down to 123.50 (top of the daily Cloud).
AUD/USD declined after data showed increase in unemployment level. Support is at 0.7315, but strong NFP will provoke a decline to 0.7260/0.7200. Strong resistance is located in the 0.7400 area.