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October '17 NFP report

October 6, 2017

As you probably know, today markets will focus on the US jobs report for September. It is estimated that jobs growth slowed to 90,000 in September due to the hurricanes that affected the US last month, this does not change our view that the underlying strength of the labour market is strong. We expect markets to look mainly at average hourly earnings and not so much non-farm payrolls. This is also what the Fed signalled at the latest meeting, as the statement explicitly said that the Fed will look through short-term weakness due to hurricanes.

 

In this report I will only cover FX pairs that I might be trading. Since we receive important news out of Canada at the same time I will cover USDCAD separately.

 

Let's begin with USDCAD and continue with other FX pairs.

 

USDCAD Daily chart

 (Click on image to enlarge)

 

A little over 40 minutes to go till the US and Canadian news and I just entered a sell on USDCAD, even though price action is indicating that the trend is up on USDCAD I do believe that a correction could occur of about 150-210 pips before the pair continues higher, hence the reason I am selling it. 

 

My TP is 207 pips away from my entry (1.25725) and my SL is 73 pips away. 

 

My fundamental analysis has indicated that we will get good news out of Canada and the possibility of weaker data out of the US so shorting USDCAD is my best option at the moment.

 

Before I cover other pairs, lets take a look at the US Dollar Index.

 

 (Click on image to enlarge)

 

As you can see, the 4H chart is trading in a possible wedge, we also have 3 higher highs which are connected with a trendline and this is a strong indication, in my books, of a bearish reversal. So USDX could drop today, before heading higher or tumbling lower. The chart is telling me today's report will be bearish and the fundamentals have so far agreed with me, but what the reality will be I will only know in about half and hour :) 

 

I am going to summarize charting in this report with the GBPUSD daily chart. 

 

 (Click on image to enlarge)

 

The reversed head and shoulders on GBPUSD is still playing out well, right now price action is sitting at two trend line support levels and is very close to the 30% bullish reversal. All of this increases m speculation that the GBP will become strong soon, or maybe just the USD will become very weak. 

 

If I can choose one point for you to remember today is that yesterday Trump told the media that this is the "calm before the storm" when the reporter asked "what storm?" Trump replied, "You'll see". These statements were done at a photoshoot at the white house where Trumpo met with US military personnel who he called "The greatest military people in the world".

 

All in all I expect a weak USD and strong CAD today and that is what I will be trading. 

 

I wish you all an excellent Friday. 

 

PS: I know the report is short, but I wanted to keep it simple today.

 

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