Late NFP Could Have Taper Implications

The US government shutdown meant that the September non-farms parole data was postponed. Now that the political stupidity has come to it’s natural conclusion, the department of Labor is back at work, so we can look forward to the missing data tomorrow. With shutdown and debt ceiling concerns trampling over taper concerns lately, we could see a return to some taper speculation, so a very good print tomorrow may be quite USD positive. The previous two NFP prints though were below expectations though so likewise, a poor print could see the dollar weaken further, as traders bet on a delayed taper in the hands of the Feds most doveish member turned chairwoman, Yellen.

USD% Index

The dollar remains quite oversold following today’s slight retracement on what turned out to be a very quiet day. the London morning tomorrow will likely be quiet, with traders waiting for the main event of the day, the delayed NFP print. A print above the 180000 consensus would see the dollar rally away from the current oversold conditions, with RSI currently still near reversal levels. With sentiment still very much dollar negative, a below par print could see further choppy selling of the dollar I remain bearish USD although this view is data dependant

USD% Index Resistance (EUR/USD support): EUR/USD 1.3670, 1.3646, 1.3624
USD% Index Support (EUR/USD support): EUR/USD 1.3710, 1.3786

EUR% Index

The Euro% index seems to have run out of steam slightly following the volatile push higher on Thursday. It remains inside a bullish channel and awaits tomorrow’s catalyst before deciding on a direction for the medium term. A poor NFP could see further longs push us towards the 100% fib expansion level, but a great print will likely see taper speculation push the index lower. I remain bullish EUR although suspect the trend is becoming exhausted in the short term

EUR% Index Resistance: EUR/USD 1.3687, 1.3700, 1.3766
EUR% Index Support: EUR/USD 1.3638, 1.3600, 1.3531

JPY% Index

We remain trapped within an expanding triangle of trend lines on the JPY% index and have pushed away from the upper levels of resistance as suggested in yesterday’s analysis. With the overall bias towards very wide range-bound price action, there is room for a push in either direction. A very poor NFP may see the index push higher on risk aversion, but a good print will likely see further weakness. We are currently at minor support which would need to be broken overnight before the quiet European session if it is to happen before NFP. I am neutral JPY although remain long USD/JPY until 99.00 or a reversal

JPY% Index Resistance (USD/JPY Support): USD/JPY 98.23, 97.55, 97.11
JPY% Index Support (USD/JPY Resistance): USD/JPY 98.65, 98.91

USD/JPY Trade Positioning

long from from 97.94, stops at 96.35

GBP% Index

The pound is starting to look heavy again, although everything will revolve around tomorrow’s NFP data and the BOE on Wednesday. We remain within a bullish channel but are now quite overbought. GBP/USD 4-hour RSI(34) is now showing quite a lot of bearish divergence having already started to move away from overbought slightly, which suggest downside soon. I remain bullish GBP although expect a major reversal soon

GBP% Index Resistance: GBP/USD 1.6200, 1.6300, 1.6350
GBP% Index Support: GBP/USD 1.6071, 1.5935

AUD% Index

Now quite overbought, the AUD% index is approaching 0.9700 and a cluster of resistance surrounding that key level which could signal a medium term retracement or even potentially a trend change. NZD/USD has already started to look quite heavy having rallied slightly further than than AUD/USD, so this could signal a turn for both Antipodean currencies.
I remain bullish AUD until 0.9700

AUD% Index Resistance: AUD/USD 0.9693, 0.9700, 0.9725
AUD% Index Support: AUD/USD 0.9573, 0.9544

CHF% Index

The CHF% index has also failed to make a new high and is at risk of forming a double top unless dollar selling finds some renewed urgency via a very poor NFP tomorrow. As such we may see some messy chop higher to meet resistance unless there is some impressive data from the USD.I remain bullish CHF although this is data dependant

CHF% Index Resistance (USD/CHF support): USD/CHF 0.8981, 0.8963
CHF% Index Support (USD/CHF resistance): USD/CHF 0.9027, 0.9050, 0.9062