US Employment data due today

The US Employment data for July is set to be released later on today. Currently the market expectations afore the Non-Farm Payrolls figure to come in at 176k which would be lower than the previous figure of 206k, in addition to the unemployment rate remaining steady at 4.1%. Should the employment data come in as expected, it may imply a loosening labour market, which in turn may further increase pressure on the Fed to cut interest rates in their September meeting as is currently expected by market analysts. As such, should the employment data come in as expected or showcase a further loosening of the labour market, it may weigh on the greenback. On the flip side, should the data instead showcase a resilient labour market, it may dampen the market’s expectations of a rate cut in September, which may provide support for the dollar.The US ISM Manufacturing PMI figure for July came in lower than expected, by coming in at 46.8 versus the expected 48.8. Moreover, even though the S&P Manufacturing PMI figure for July did come in higher than expected at 49.6 instead of 49.5, both financial releases tend to imply a contraction in the US manufacturing sector. Therefore, should the financial releases continue to imply a worsening manufacturing sector, it may increase concerns about the resiliency of the US economy and thus may weigh on the greenback.Over in the UK, the BoE cut interest rates by 25bp  during their monetary policy meeting yesterday. Interestingly the vote was much closer than what was expected, with 5 policymakers voting for a rate cut instead of 6, and 4 policymakers voting for the bank to remain on hold, instead of the expected 3. Nonetheless, the decision by the bank to cut interest rates appears to have weighed on the pound, as their rate-cutting cycle has now begun.On another note, we still remain concerned about the escalating tensions in the Middle East.

GBP/USD appears to be moving in a downwards fashion and supporting our case is the RSI indicator below our chart which currently registers a figure below 30, implying a strong bearish market sentiment. For our bearish outlook to continue, we would require a clear break below the 1.2700 (S1) support level, with the next possible target for the bears being the 1.2615 (S2) support level. On the flip side for a bullish outlook we would require a clear break above the 1.2775 (R1) resistance line with the next possible target for the bulls being the 1.2855 (R2) resistance line. Lastly, for a sideways bias we would require the pair to remain confined between the 1.2700 (S1) support line and the 1.2775 (r1) resistance line.

WTICash appears to be be  moving in a downwards moving fashion. We opt for a bearish outlook for the commodity and supporting our case is the RSI indicator below our chart which currently registers a figure near 40 implying a bearish market sentiment. For our bearish outlook to continue, we would require a clear break below the 74.75 (S1) support line with the next possible target for the bears being the 71.50 (S2) support line. On the flip side for a bullish outlook, we would require a clear break above the 78.00 (R1) resistance line, with the next possible target for the bulls being the 80.60 (R2) resistance level. Lastly, for a sideways bias we would require the commodity to remain confined between the 74.75 (S1) support line and the 78.00 (R1) resistance level.

Other highlights for the day

Today in the European session, we get Switzerland’s CPI rate for July. In the American session we get the US employment data  for July followed by the US Factory orders rate for June. On Monday’s Asian session, we make a start with Australia’s final Judo bank services PMI and final Judo bank composite PMI figures followed by Japan’s Jibunk final services PMI figure .

GBP/USD 4H Chart

• Support: 1.2700(S1), 1.2615 (S2), 1.2525 (S3)
• Resistance: 1.2775 (R1), 1.2855 (R2), 1.2945 (R3)

WTICash  Daily Chart

• Support: 74.75 (S1), 71.50 (S2), 67.95 (S3)
• Resistance: 78.00 (R1), 80.60 (R2), 83.45 (R3)

If you have any general queries or comments relating to this article please send an email directly to our Research team at research_team@ironfx.com

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