With a lot of uncertainty about the Fed’s imminent monetary policy decisions, the non-farm payrolls report will be pivotal and stays in the spotlight until the end of the week. New jobs for August were expected to decline by almost half after a stellar performance in the previous print, with the consensus being 295k versus 528k in July.
Let’s shift our focus to how this event will steer the direction of the USD, and the different assets that are related to the dollar.
If the actual comes out lower than the forecast, we can expect the Fed to be less aggressive and raise interest rates by 50bps in their next meeting. On the flip side, if the actual print beat expectations by a significant margin say 350k+, it may swing the argument in favor of a 75bps hike. Furthermore, if the average hourly earnings m/m comes out higher than the expected 0.4%, it may seal a 75bps hike from the Fed.
Precious Metals
Gold
XAUUSD Daily
After going through an extended loss amounting to approximately $100 since its previous swing high formed in mid of August, gold is now trading near a critical support zone ($1680-$1700). Gold did make a minor recovery (+0.40%) since today’s open amid NFP and it is highly dependent on the upcoming data.
If we disregard fundamentals and look from a technical point of view, gold is poised for further losses with the momentum in the bears’ favor. 1680 is the last hope for gold buyers and if it breaks, gold may continue to slide until 1650 psychological level. Confluences for sellers include the widening gap between the two moving averages and the solid bearish channel.
The client sentiment collected from various sources points to a bearish outlook for gold with more than 84% of traders currently net long. It serves as a powerful contrarian indicator to back our technical analysis.
Please trade with caution as you may still get stopped out due to heightened volatility even if you are right on the eventual direction
US Stocks Market
SP500 Daily
SP500 found support yesterday near the 3950 area after an extended losing streak. There were not many movements in pre-markets as all eyes are on NFP. We do not expect 3950 to hold should the job reports come out stronger than forecasted as the Fed may hike more aggressively which is generally not conducive for the equity markets.
Forex
USDJPY
USDJPY Daily
USDJPY broke 140 key resistance with conviction before NFP thanks to the ever-stronger dollar. Considering the strong underlying bullish momentum, we can expect a spike to 141.50 area during NFP even if it doesn’t end the week above that level.
Energies
Crude oil
USOIL H4
Oil bounced off the $87 support on the expectations that OPEC may discuss output cuts during their meeting on 5 September. On the other hand, China’s Covid curbs may come back into play, limiting further price gains.
Welf
Trader, Technical Analyst
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