The U.S. jobs report for July caps a full week of data that should shed light on the global pace of recovery from a sharp, severe recession caused by responses to the new coronavirus. US COVID-19 cases have topped 4.6 million yet the infections curve is showing signs of declining. On the other hand, mortalities have surpassed 155,000 and are on the rise. The increase since mid-June has already caused economic damage that the Federal Reserve acknowledged.
Republicans and Democrats are set to resume talks for the next fiscal stimulus bill later on Monday after weekend negotiations were inconclusive. The $600/week top-up for the unemployed and other programs lapsed at the end of July and their absence may weigh on the economy.
Sino-American tensions remain elevated as President Donald Trump reportedly wants to ban Tik-Tok and other Chinese applications in the US. Microsoft may purchase the popular social network and allow it continue operating in America. The world’s largest economies are also clashing over other topics ahead of the presidential elections.
China’s Caixin manufacturing index, a private gauge of factory activity tilted toward small and private companies, is expected to show another month of expansion in July. An official gauge last week beat expectations, signaling the country’s economic recovery remained on track.
Japan releases a second revision for January-to-March gross domestic product. Earlier data showed the economy contracted at an annualized 2.2% pace. Economists expect downward revisions, reflecting weaker-than-expected capital expenditures.
The Institute for Supply Management releases its U.S. manufacturing index for July. Factory activity is expected to improve for the third straight month as manufacturers rebound from shutdowns and supply-chain disruptions. Faster growth is expected in the industrial sector, which is more resilient to surging coronavirus cases.
The Bank of England is due to announce its latest policy decision alongside updated forecasts for the U.K. economy. Economists expect the BOE to keep policy on hold after cutting its benchmark rate to a new low in March and stepping up its bond-buying programs to cope with the fallout from Covid-19.
U.S. jobless claims rose for two straight weeks in July. Figures for the week ended Aug. 1 will be scrutinized to see if the labor market is signaling another rise in layoffs while Covid-19 cases remain elevated.
China’s customs bureau releases trade data for July. Import and export figures will be closely watched as a gauge of Chinese demand for foreign goods and the rest of the world’s demand for Chinese products.
Japan’s household spending for June is expected to have declined 8%, according to a survey by data provider Quick, compared with a decrease of 16.2% in May. Shops and restaurants slowly reopened after Japan lifted a nationwide state of emergency in late May.
U.S. employers are expected to add jobs for the third straight month. Two potential problems: Recent gains won’t be nearly enough to recoup losses in March and April, and the pace of job creation — though elevated by historical standards — appears to be slowing as the recovery loses some steam.
👉 A major incident was declared in Greater Manchester, UK due to a continued rise in coronavirus infections with substantial increases for Manchester, Oldham and Tameside. Ireland’s Health Minister said they are considering additional measures to restrict non-essential travel.
👉 USD/JPY rises to a one-week high as Seven & i Holdings’s $21 billion acquisition of a U.S. convenience-store chain raises some speculation for more foreign acquisitions by Japanese companies, Aozora Bank’s Akira Moroga says. That gain adds to the pair’s sharp rebound from Friday that was driven by profit-taking in a recent buildup of dollar short positions, he says. USD/JPY rose to 106.43 earlier, the highest level since July 24, and is now at 105.90, compared with 105.85 late Friday in New York. The dollar’s broad weakness may persist as the Fed’s easing and an ample supply of dollar liquidity are likely to continue, Moroga says.
👉 Gold has taken another step toward $2,000 while the dollar is looking for a direction after recovering some of July’s losses on Friday. August kicks off with the first hint toward the Non-Farm Payrolls, uncertainty about fiscal stimulus, tense Sino-American relations, and more. XAU/USD is trading around $1,970 after making another move toward $2,000. The precious metal’s retreat from the highs has been accompanied by a recovery in US ten-year bond yields, which are around 0.55%.
👉 U.S. WTI crude oil futures (September) climbed 0.9% to $40.27 a barrel. Oil-field-services company Baker Hughes reported that U.S. oil rigs amounted to 180, compared with 181 in the previous week.
As we have observed earlier in the Currency Monitoring Chart, we discovered that NZD/CHF lines are separated with the farthest distance.
INTRADAY MARKET INSIGHTS
The pair is rebounding from a recent low of 104.14, but remains capped by the descending 20-day moving average, which stands below the 50-day one. Meanwhile, the level of 108.15 is holding firmly as the key resistance. Unless this level is surpassed, the pair is expected to return to 104.20 before sinking further toward 102.40.
1st support – 104.20 (major)
1st resistance – 108.15 (major)
2nd support – 102.40 (moderate)
2nd resistance – 109.65 (moderate)
The pair has entered a consolidation phase after retreating from a recent high of 1.1771. However, it remains at levels above the ascending 20-day moving average. The trailing key support has been raised to 1.1560. Unless this level is breached, the short-term outlook is still bullish, and the pair should target 1.2000 and 1.2130 on the upside. Alternatively, a return to 1.1560 would open a path toward 1.1380 on the downside.
1st support – 1.1560 (major)
1st resistance – 1.2000 (major)
2nd support – 1.1380 (moderate)
2nd resistance – 1.2130 (major)
The pair continues to ride on the ascending 20-day moving average keeping the short-term bias as bullish. The trailing key support has been raised to 0.6960 (around the 50-day moving average). As long as the pair trades at levels above this key support, it should target 0.7390 and 0.7510 on the upside. Alternatively, below 0.6960, expect a further decline toward 0.6780 on the downside.
1st support – 0.6960 (major)
1st resistance – 0.7390 (major)
2nd support – 0.6780 (major)
2nd resistance – 0.7510 (major)
The pair remains holding on the upside and is supported by a rising 20-day moving average. The relative strength index stay above its neutrality level at 50, suggesting the lack of downward momentum for the prices. Hence, unless the support level at 0.6500 is not broken, look for a further advance with targets at 0.6730 and 0.6815 in extension. Alternatively, below 0.6500, expect a return with 0.6370 and 0.6265 as targets.
1st support – 0.6500 (major)
1st resistance – 0.6730 (moderate)
2nd support – 0.6370 (major)
2nd resistance – 0.6815 (moderate)
The pair is rising along the upper Bollinger band. The upward momentum is further reinforced by both rising 20-period and 50-period moving averages. To conclude, unless the support level at 1.2760 is violated, the pair should target 1.3205 and 1.3515 on the upside. Alternatively, a break below 1.2760 would call for a retracement with 1.2470 and 1.2245 as targets.
1st support – 1.2760 (major)
1st resistance – 1.3205 (moderate)
2nd support – 1.2470 (minor )
2nd resistance – 1.3515 (moderate)
The pair is under pressure below the resistance level at 0.9280, which should limit the upside potential. Besides, the declining 20-period moving average should help to pressure the prices lower. The relative strength index is locating at 30s, suggesting the downside momentum for the prices. Therefore, below 0.9280, expect a drop with targets at 0.9040 and 0.8940 in extension. On the other hand, crossing above 0.9280 would trigger a rebound 0.9390 and 0.9470 as targets.
1st support – 0.9040 (minor)
1st resistance – 0.9280 (major)
2nd support – 0.8940 (minor)
2nd resistance – 0.9390 (moderate)
The technical outlook of the pair remains negative as the prices are capped by a declining trend line. Currently, the price are trading below both declining 20-day and 50-day moving average. Hence, as long as the resistance level at 1.3610 is not surpassed, expect a drop with targets at 1.3300 and 1.3100 in extension. On the other hand, crossing above 1.3610 would bring a bounce with 1.3720 and 1.3870 as targets.
1st support – 1.3300 (minor)
1st resistance – 1.3610 (major)
2nd support – 1.3100 (minor )
2nd resistance – 1.3720 (moderate)
Further upside. The pair posted a rebound and crossed above the 20-period moving average. The rising 50-period moving average is acting as the support level now. The relative strength index has landed on its neutrality level at 50 and is turning upward. To conclude, unless the support level at 124.48 is violated, the pair should reach 125.25 and 125.47 on the upside. In an alternative scenario, a break below 124.48 would open a path to 124.12 on the downside.
Rebound expected. The pair remains trading above the key support level at 0.8969, which should help to maintain the bullish bias. The relative strength index has broken up its oversold level at 30, calling for a bounce. In this case, as long as 0.8969 holds on the downside, look for a rebound to 0.9023 before targeting to 0.9038 in extension. On the other hand, a break below 0.8969 would turn the outlook to negative and call for a drop to 0.8943 as a target.