On December the 3rd Canada reported a 6% unemployment rate, while the expectations were at a 6.6% level. Less than expected unemployment rate is always hawkish news for the national currency.
Trading plan for May 11
Here’s a Forex trading plan for Friday, May 11, 2018.
Summary: The USD is in a setback. Think about shorts in USD/JPY and USD/CAD.
Firstly, let’s say a few words about the results of Thursday. As expected, the Bank of England left its interest rate unchanged at 0.5%. Notice that 2 out of 9 members of the central bank’s Monetary Policy Committee (MPC) voted to raise the rate despite the fact that the recent economic figures from Britain weren’t great. However, the BoE cut its growth and inflation projections for this year and next. The pound’s initial reacting was negative. GBP/USD is fighting for 200-day MA at 1.3540. Support is at 1.3490 ahead of 1.3400.
US CPI growth missed the forecasts – this can cool the USD a bit. US Treasury yields returned below 3%. The only news release that remains in the US this week is the preliminary consumer sentiment due at 17:00 MT time on Friday.
The topic that is currently widely discussed in the market is the fact that Donald Trump pulled the US out of its 2015 nuclear deal with Iran and promised to reintroduce sanctions on the country’s oil exports. We can’t say that the news made a great impression on the market: traders were mostly ready for this plus many of them think that the US president is just trying to put Iran under pressure to agree to American conditions and won’t really do it. Never the less, oil prices are at the highest levels since 2014 and may rise further.
High oil and a setback in the US figures are good for the Canadian dollar. Canada will release labor market data at 15:30 MT time – this will surely make trading livelier.
USD/CAD found support near 200-week MA in the 1.2750 area. A decline below that level will open the way down to 1.2680 (100-day MA and the bottom of the daily Ichimoku Cloud). Resistance is at 1.2790 and 1.2850.
The market’s risk sentiment is not well given political tensions and missiles in the Middle East. If USD/JPY fall below 109.25, it will target 108.70.
New Zealand’s dollar was hit by the more dovish Reserve Bank of New Zealand but then tried to recover. Yet, there’s resistance at 0.6970 ahead of 0.70 and 0.7030 for NZD/USD.
EUR/USD reversed up from 1.1840. The euro may stretch its recovery to 1.20. At the same time, discussions on forming a new government in Italy to end nine weeks of political stalemate are continuing and could remain a source of market volatility. The ECB president Mario Draghi will speak on Friday at 16:15 MT time.
For a long time, traders considered American Non-farm Payrolls (NFP) the most important release in the market. However, the situation has changed. Now US CPI moves financial markets.
The higher prices seen today are generally related to the pandemic, that’s no doubt. US consumer prices jumped in October at the fastest pace in three decades putting the Biden administration on the defensive and increasing prospects that the Federal Reserve will raise interest rates next year. Jerome Powell says Fed will discuss speeding up bond-buying taper at the December meeting. What does it mean for markets?
Gold is about to break the most significant support. The US dollar index keeps gaining momentum. However, the situation might change this week, and we might see a tiny correction. Investors might return to risk-on and push the US stock market indices and cryptocurrencies to the upside. These and more trade ideas are in our new weekly video! Do not miss it!
This week is likely to be pivotal for many assets, including gold, USD, and several stocks. However, we need to be focused and react fast to the ever-changing environment to get the most from it.
This week, the majors will be affected by the interest rate decision by the Federal Reserve, NFP, the BOE Meeting, and more events.