US employment report for July disappoints traders

The USD tended to wobble and finally edged lower against its counterparts on Friday as the US employment report for July tended to disappoint traders. The report as such tended to send out mixed signals, as the NFP figure dropped more than expected, implying that the ability of the US employment market to create jobs eased, yet the unemployment rate ticked down highlighting the US employment market’s tightness. Furthermore, the average earnings growth rate failed to slow down, in a sign that the US employment market may continue to feed inflationary pressures in the US economy.  It’s characteristic that both Atlanta Fed President Bostic and Chicago Fed President Goolsbee both noted the rebalancing of the US employment market, which could allow the Fed to remain on hold in the September meeting. On the other hand, Fed Board Governor Bowman stated over the weekend that more rate hikes would be required expressing a more hawkish approach within the Fed. We note the split within the Fed yet tend to expect the bank to take another breather at its September meeting to grasp the impact of its cumulative monetary policy tightening. 

USD/JPY edged higher during today’s Asian session, reemerging above the 141.90 (S1) level. Yet the downward trendline incepted since the 3^rd of August and for switching our bearish outlook we would require a clear break above it. Please note that the RSI indicator is implying some sort of stabilisation as it moves higher, aiming for the reading of 50. Should the bulls actually take over, we may see the pair breaking the prementioned downward trendline and aim if not breach the 143.35 (R1) resistance line. Should the bears regain control over the pair we may see USD/JPY breaking the 141.90 (S1) support line once again and aiming if not breaching the 140.80 (S2) support level.     

Other highlights for the day:

Today we note the release of  Germany’s industrial output for June, UK’s Halifax House Prices for July and Eurozone’s Sentix Index for August and on the monetary front, we note that Atlanta Fed President Bostic speaks. During tomorrow’s Asian session, we note the release of Japan’s All household spending, current account balance and trading balance all for June, Australia’s Consumer Sentiment for August and Business conditions and confidence for July as well as China’s trade data for July, while on the monetary front, RBAs’ Schwarz is scheduled to speak and all could have an effect on the Aussie. Currently, AUD/USD seems to show some signs of stabilisation between the 0.6620 (R1) and the 0.6515 (S1) levels. We note that the RSI indicator continues to run just below the reading of 50, which may imply that the bearish sentiment may have eased. Despite the downward trendline being present for a bearish outlook of the pair, we would require AUD/USD to break the 0.6515 (S1) support line and aim for the 0.6400 (S2) support level. Should a buying interest be expressed by the market we may see AUD/USD breaking the prementioned upward trendline in a first sign that the downward movement has been interrupted and continue higher to break the 0.6620 (R1) resistance line and aim for the 0.6725 (R2) resistance level.

As for the rest of the week  

On Tuesday we get from Japan the current account balance for June, China’s trade data for July, Germany’s final HICP rate for July and Canada’s trade data for June. On Wednesday we note the release of China’s inflation metrics, while on Thursday we get Japan’s corporate goods prices, Norway’s and the Czech Republic’s CPI Rates yet the main release is expected to be the US CPI rates, all being for July. On Friday we note the release of the UK GDP rates, France’s final HICP rates and from the US we get the preliminary University of Michigan consumer sentiment for August.     

USD/JPY H4 Chart

Support: 141.90 (S1), 140.80 (S2), 139.15 (S3)

Resistance: 143.35 (R1), 145.10 (R2), 146.80 (R3)

AUD/USD  H4 Chart

Support: 0.6515 (S1), 0.6400 (S2), 0.6285 (S3)

Resistance: 0.6620 (R1), 0.6725 (R2), 0.6845 (R3)

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