The latest U.S. jobs update is coming soon, which of course means a busy day for Dollar traders this Friday. And always, we’ll check out the most liquid currency pair, EUR/USD, for short-term opportunities to play the likely spike in volatility for the Greenback.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 11925.25 0.0% FTSE: 7030.87 -1.29% S&P 500: 2895.08 +0.26% DJIA: 26092.71 +0.05% |
US 10-yr 1.548% -0.049 Bund 10-YR -0.59% -0.045 UK 10-YR: 0.474% -0.026 JPN 10-YR: -0.188% -0.021 |
Oil: 52.71 -1.70% Gold: 1502.50 +0.91% Bitcoin: 8114.77 -2.82% Etherium: 172.74 -4.51% |
Fresh Market Headlines & Economic Data:
- Trump says Chinese delegation coming to U.S. next week for trade talks
- S&P 500 turns positive, making back earlier losses as rate-cut expectations increase
- U.S. Services survey shows economy is weaker than expected amid slowdown fears
- 2019 September Challenger Report: Announcements Fall 22% From August
- Chicago Fed’s Evans says he’s worried about inflation outlook, open minded on more rate cuts
- UK Prime Minister Boris Johnson plans to suspend Parliament again
- UK service sector activity contracts in September
- EU and Ireland skeptical of a Brexit breakthrough after UK PM Johnson’s offer
- Oil slips toward $57 as economic gloom weighs
- Euro area private sector close to stagnation in September
- German service sector loses momentum in September amid fall in new business
- Volume of retail trade up by 0.3% in euro area; Up by 0.2% in EU28
- Industrial producer prices down by 0.5% in euro area; Down by 0.4% in EU28
- In seasonally adjusted terms, the balance on goods and services in Australia was a surplus of $5.9B in August 2019, a decrease of $1.3B on the surplus in July 2019
- The ANZ World Commodity Price Index was unchanged in September
- BOJ’s Funo: Global recovery delayed, no sign of it happening yet
- BOJ’s Funo warns on overseas risks, signals readiness to respond
- Japan service sector output rises solidly in September but new orders grow at weak pace relative to 2019
Upcoming Potential Catalysts on the Forex Calendar:
- Australian Retail sales & Financial Stability Review at 2:30 am GMT (Oct. 4)
- RBA Assistant Governor Ellis speaks in Geelong at 3:00 am GMT (Oct. 4)
- U.S. Non-Farm Payrolls & Trade balance at 1:30 pm GMT (Oct. 4)
- Canada Trade balance at 1:30 pm GMT (Oct. 4)
- Canada Ivey PMI at 3:00 pm GMT (Oct. 4)
What to Watch: EUR/USD
In case you missed the USD Weekly Forecast, you should know that we’ll be getting the month U.S. employment update tomorrow, which will likely bring a short burst of volatility to the U.S. Dollar during the morning U.S. trading session. And if you haven’t caught up on the event yet, be sure to check out Forex Gump’s write-up, “Event Preview: U.S. NFP Report (September)”
If interested in trading the event, it’s always a good idea to take on top tier catalysts with highly liquid assets to reduce slippage risk, and in this case the EUR/USD is almost always a great choice given that it is probably the most liquid currency pair.
So after reading Forex Gump’s event preview, if you’re fundamentally bullish on EUR/USD (i.e., bearish on the U.S. dollar short-term), then you may want to consider a break and retest of the 1.1000 before working on a long position. That area was a strong level of interest that once held as support before turning into resistance in September. The situation could reverse on bearish dollar sentiment, and if 1.1000 held as support once again, the next resistance area around 1.1060 – 1.1080 makes for a great short-term potential return-on-risk if using the daily ATR (around 60 – 65 pips) as your trade invalidation guide.
If you’re bearish on EUR/USD after reading the event preview guide, then shorting on a retest of that previously discussed strong area of interest around 1.1000 is something to consider. And given the level of potential volatility that may come, scaling into a short between 1.1000 to 1.1050 makes sense if working on a swing type trade rather than a short-term trade. For a short-term setup, the potential return-on-risk looks better when waiting for a bounce up to the 1.1000 – 1.1020 area, but there’s nothing wrong with going with a preemptive short position now if you’re conviction is high that USD will rally. Although you should widen out your stop and going with a smaller position size if you do, and you can always scale into a larger position / roll stop if you turn out to be right.
