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The lack of stimulus progress in the U.S., Trump possibly contracting the COVID-19 virus, and profit-taking ahead of the U.S. NFP report kept traders from taking on risk during the Asian session.

Will the risk-averse theme extend to London session trading?

Here are the Asian session’s top headlines to help you frame your next trade setups:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • Japan’s consumer confidence at 5:00 am GMT
  • Spain’s unemployment change at 7:00 am GMT
  • Eurozone CPI flash estimate at 9:00 am GMT
  • Eurozone core CPI at 9:00 am GMT
  • U.S. NFP report at 12:30 pm GMT

What to Watch: GBP/JPY

GBP/JPY 1-hour Forex Chart
GBP/JPY 1-hour Forex Chart

GBP/JPY is about 100 pips below the 136.50 that marks the ceiling of a 300-pip range on the 1-hour time frame.

Today marks the last day of the final round of talks between the U.K. and the EU.

EU’s chief negotiator Michel Barnier will meet with his British counterpart David Frost to see if they have enough to enter into the more focused “tunnel talks” in the next two weeks. If they don’t, then Britain is in for a messy exit by the end of the year.

Meanwhile, traders are on standby ahead of the U.S. NFP report. Word around is that Uncle Sam will print a slower pace of job creation but, as Forex Gump has pointed out, markets may also focus on other catalysts (like Trump and the FLOTUS testing positive for COVID-19).

If Trump’s condition or a weaker NFP reading weighs on USD/JPY and drags the other major yen crosses along with it, then GBP/JPY could at least revisit the 135.00 levels near the mid-range and 200 SMA support.

A lack of progress on Brexit negotiations or a confirmation of a no-deal Brexit could also pull GBP/JPY lower. Heck, it could even drop to the 133.50 range floor!

But if (a) today’s NFP release surprises to the upside, (b) Trump finds a way to fulfill his obligations despite his quarantine process, or (c) Barnier and Frost announce enough progress to start the tunnel talks, then we could see some risk-taking that would take GBP/JPY back up to the 136.50 range resistance.

GBP/JPY moves by an average of 111 pips on Fridays so you might want to keep that in mind when placing your entry and stop-loss levels.