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Trading NFP (Non-Farm Payrolls June 2020 data) US Economy in Focus

Early this morning, Dow Jones Newswires released a report about U.S. Dollar Eases, Stocks Mixed Ahead of Non-Farm Payrolls

πŸ‘‰ Given the holiday-shortened trading week in the United States, despite some big economic data releases, traders are taking a defensive stance.

πŸ‘‰ US jobs report for June is due tonight at around 8:30 pm Philippine time. The forecast shows that there is an increase of around three million jobs for June after around 2.5 million from the previous month, extending the recovery after losing approximately 20 million in April.

πŸ‘‰ The unemployment rate is expected to drop from 13.3% down to 12.3%.

πŸ‘‰ The Automatic Data Processing (ADP) Jobs Report showed that the U.S. economy added 2.369 million private jobs in June (+2.850 million expected). The Markit U.S. Manufacturing Purchasing Mangers’ Index rose to 49.8 in June (49.6 expected). Construction Spending slipped 2.1% on month in May (+1.0% expected).

πŸ‘‰ Investors will closely watch tonight the release of the U.S. official jobs report for June (an addition of 3.074 million Non-Farm Payrolls, a fall in Jobless Rate to 12.5% expected). And Initial Jobless claims for the week ended June 27 (a decline to 1.350 million expected) will be reported.

πŸ‘‰ Also, Trade Balance for May (an increase in deficit to $53.1 billion expected), Factory Orders (+8.6% on month expected) and Durable Goods Orders (+15.8% expected) will be reported.

COVID-19 CORONAVIRUS PANDEMIC cases deaths recovered (July 02, 2020, 7.54 GMT)πŸ‘‰ US COVID-19 new daily infections have topped 50,000 for the first time, with several states slapping new restrictions and others – such as New York – delaying the reopening measures. Intensive Care Units surpassed 100% normal capacity and some facilities in Miami are also struggling.

πŸ‘‰ Meanwhile, President Donald Trump has finally endorsed wearing masks, saying he would wear one. The president is following Republican governors that are pushing for using the basic means of protection.

As we know it, Non-Farm Payrolls measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity.
With the expected data to be released, our reaction should be as follows. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.


USD/JPY Intraday:  
Watch 107.15 downside. The pair keeps trading on the downside after retreating from an intraday high of 108.16 seen yesterday. Currently it has crossed below the lower Bollinger band while testing the first downside target at 107.30. Therefore, the technical configuration is very bearish, and a break below 107.30 would trigger a further drop toward 107.15. Only a return to the key resistance at 107.60 would bring about a bullish reversal.

EUR/USD Intraday:
Bullish bias above 1.1235. The pair is consolidating some gains after marking an intraday high of 1.1275 seen yesterday. The relative strength index stays above 50 showing a lack of downward momentum for the pair. Unless the key support at 1.1235 (around the 50-period moving average) is breached, the pair is expected to revisit 1.1265 and 1.1275 on the upside. Alternatively, a break below 1.1235 would open a path toward 1.1215 on the downside.

AUD/USD Intraday:
Key resistance at 0.6925. The pair has retreated and is testing the 50-period moving average. The relative strength index is around its neutrality level at 50, suggesting the lack of upward momentum for the prices. Hence, below 0.6925, expect another down leg with targets at 0.6900 and 0.6880 in extension. In an alternative scenario, a break above 0.6925 would change the outlook to positive and call for an advance with 0.6945 and 0.6960 as targets.

NZD/USD intraday: 
Upside prevails. The pair edged higher along the upper Bollinger Band. The upward momentum is further reinforced by both rising 20-period and 50-period moving average. Hence, as long as the support level at 0.6453 is not broken, look for a further advance to 0.6523 before targeting to 0.6543. On the other hand, a break below 0.6453 would open a path to 0.6419 on the downside.

GBP/USD Intraday: 
Look for 1.2535. Although the pair posted a pullback from 1.2490, it is still supported by a rising 50-period moving average Even though a continuation of the consolidation cannot be ruled out, its extent should be limited by the support level at 1.2425. To conclude, as long as this key level holds on the downside, look for a further advance with targets at 1.2490 and 1.2535 in extension. Alternatively, crossing below 1.2425 would bring a return with 1.2385 and 1.2355 as targets.

USD/CHF Intraday: 
Under pressure. The pair remains under pressure below the resistance level at 0.9470 after marking a lower bottom. The declining 50-period moving average is acting as resistance now. In this case, unless the resistance level at 0.9470 is violated, the pair should return to 0.9440 before dropping to 0.9430 in extension. Alternatively, crossing above 0.9470 would trigger a technical rebound with 0.9490 and 0.9505 as targets.

USD/CAD Intraday: 
Upside prevails. The pair has broken above a falling wedge bullish pattern. Currently, the 20-period moving average has crossed above the 50-period moving average, while the relative strength index has climbed to the 60s, suggesting a bullish bias. As long as the key support at 1.3570 holds, expect a bounce to 1.3615 and 1.3640. Alternatively, a break below 1.3570 would trigger a return to 1.3545 on the downside.

EUR/JPY Intraday: 
Target 120.03. The pair remains on the downside as it has formed a lower-high. In fact, it is capped by the 50-period moving average, which is turning downward. The relative strength index stays in the 40s, indicating a bearish bias. Unless the key resistance at 121.29 is surpassed, the pair should target 120.30 and 120.03 on the downside. Alternatively, above 121.29, expect an advance to 121.75.

EUR/GBP Intraday: 
Rebound. The pair has stabilized after reaching the lower boundary of a bearish channel drawn from June 29. Currently, it has broken above the 20-period moving average, while the relative strength index shows a bullish divergence. Above the key support at 0.8992, expect a further rebound to 0.9051 and 0.9067. Alternatively, a break below 0.8992 would trigger a decline to 0.8965.

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