It’s NFP Friday, forex fellas!
Here’s how price action is looking so far and what I’m watching ahead of the top-tier jobs report.
Before moving on, ICYMI, yesterday’s watchlist looked at GBP/USD testing the range support ahead of the BOE decision. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Eurozone headline CPI flash estimate dipped from 3.4% y/y to 3.3% in January vs. projected 3.2% figure, core CPI flash estimate down from 2.9% to 2.8% vs. 2.7% forecast
BOE kept interest rates on hold at 5.25% as expected in 2-1-6 vote, as one member voted to cut borrowing costs
BOE upgraded inflation forecasts for the next two years and cited that “GDP growth is expected to pick up gradually… reflecting a waning drag on the rate of growth from past increases in Bank Rate”
During the presser, BOE Governor Bailey mentioned that they are not yet at the point where they can lower interest rates since they project inflation could stay above target for three years
U.S. Challenger job cuts slowed from 20.2% year-over-year in December to 20.0% in January 2024, although this translated to 136% month-over-month gain due to tech and financial sector cuts
U.S. ISM manufacturing PMI climbed from 47.4 to 49.1 vs. projected dip to 47.2 in January, as prices component picked up from 45.2 to 52.9 and employment index fell 0.4 points to 47.1
Australian quarterly PPI down from 1.8% quarter-over-quarter in Q3 2023 to 0.9% in Q4, lower than expected dip to 1.8% figure
Price Action News
Overlay of GBP vs. Major Currencies Chart by TradingView
After a mixed run in earlier trading sessions, pound pairs popped higher during the BOE decision when the central bank kept policy unchanged but upgraded inflation forecasts.
Although one MPC member voted to CUT interest rates this time, a couple of hawkish policymakers still wanted to increase borrowing costs due to elevated price pressures. Also, the statement noted that GDP growth could continue to pick up gradually.
Sterling managed to hold on to its gains versus the dollar and yen while returning some winnings to its European rivals, the euro and franc, flash CPI readings in the bloc also reflected strong inflationary pressures.
Upcoming Potential Catalysts on the Economic Calendar:
U.S. non-farm payrolls report at 1:30 pm GMT
U.S. revised UoM consumer sentiment index at 3:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
USD/JPY: 15-min
USD/JPY 15-min Forex Chart by TradingView
Anyone gutsy enough to trade dollar pairs during today’s NFP release?
We might be in for a bit of consolidation then another volatile run for the majors in today’s New York trading session, as the outcome of Uncle Sam’s January jobs report could either underscore or undermine the Fed’s latest decision.
Recall that the FOMC hinted that they’re inclined to keep interest rates “higher for longer” by dashing hopes of a March rate cut.
If the employment report manages to beat market expectations, USD/JPY might be in for a bullish breakout from its descending triangle pattern on the 15-min time frame.A move above the triangle top just past the pivot point level (146.47) and the 146.50 minor psychological mark might confirm that a rally of the same height as the chart pattern is in order.
On the other hand, a downbeat NFP reading could spur dollar selling and a USD/JPY move below the triangle support and S1 (145.83).
Just don’t forget to check out the underlying jobs components and any revisions to previous data before taking any large dollar positions!
However you choose to trade this setup, make sure to stick around in case you need to make short-term adjustments to reflect a choppy trading environment.
