Trading Market Commentary August 4, 2017

Commentary

Non-Farm Payroll on Friday was handed, and market place stats claim that the US Employment Report data is considered the most significant month-to-month release, resulting in the most surprise robust volatility in currencies and most durable moves. 

Keeping that in mind, much better than anticipated numbers may be more than enough to cause a meaningful market correction within the most significant trend of the last few weeks, the US Dollar’s collapse. Sure enough, the Greenback jumped higher versus its all the key competitors. However the fiat currency continues to be barely off from its 2-year low levels versus the Euro Dollar (EURUSD), so there is plenty of space for the correction without having to threaten the underlying trend pattern.

American Market 

The DJ (DowJones) at the beginning session added in close to 80 points, however, Index moved lower toward the balance of the trading session. The bond markets sold off; VIX (Chicago Board Options Exchange Volatility Index)  broke lower which is back again using a 'nine' handle. Essential chatter on Friday afternoon was that this is a 2nd-month the traders and investors have witnessed a plus 200,000 payroll employment release and now questions are what will the Federal Reserve’s policy move be?

This good news prompted a steepening of the curve in expectation. Having another closing record for the DJ and appears that the broader market (S&P500 and NASDAQ) has the chance to make-up about lost ground versus the DJ. Should this be the start of healthier economic data, then a strain between the Fed (Federal Reserve) and ECB (European Central Bank) has a possibility to increase. And markets may hear warning signs of that when the markets will look at the annual meeting in Jackson Hole, Wyoming on August 24th with interest.

European Markets

Eurozone early sessions were going through a greater market for all of the main Indexes having results of about plus 1% for German DAX30,  Spanish IBEX35, and the Franch CAC40. With UK's FTSE100 closing around plus 0.5%.

The morning hours chat has been all about the outlook of US payroll numbers. However, the market managed to do notice robust earnings release from RBS (Royal Bank of Scotland) having a profit the very first time in 36 months.

Asia-Pacific Market

Markets in Asia-Pacific region were giving the impression of being on borrowed time for a couple of days this week. Many market averages were lower however we saw a well-deserved reversal in the KOSPI (Korea Composite Stock Price Index) after Friday's drumming, as well as a tiny gain for the HK's Hang Seng Index which crept upward by 0.1% having real estate equities leading a handful of the achievements. The Japan Nikkei225 shed 0.4% with Industrials and food suppliers dropping more ground as opposed to auto manufacturers to raise.

Currency and Gold Market

Just after developing a bottom at the psychological 110 handle, Japanese Yen (USDJPY) moved significantly higher in the North American trading session on the back of the robust US NFP (Non-Farm Payrolls) report. The US Dollar Index (DXY) tested critical to support last week at 92.62, an amount that kept the average higher in 2015 /16 year. Friday’s rally shows DXY is climbing to new high levels for that week, a close price under last week’s open of 93.95 isn't supporting a bullish uptrend in the meantime.

Euro Dollar (EURUSD) has busted several significant levels of support. The psychological 1.18 handle fell close to the lower distinctive line of an increasing trend line to establish a confluence. The Euro has erased last seven days increases resulting from the decline on Friday, and possibly a close around present levels would likely lead to a bearish mode.

The yellow metal has sold off, also, retreated from seven-week highs which should be no real surprise following much better than anticipated July NFP data ultimately giving the Greenback something to cheer about. The actual story is the lack of good trading action; $1260 is the important support level in gold for now.

What's Ahead for Next Week

The economic news calendar for the upcoming week is relatively quiet. However, traders and investors will probably keep watch over remarks by a few Fed officials. Reports on PPI (Producer Price Index) and CPI (Consumer Price Index) labor productivity, inflation and costs might also draw attention.


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