Headline Event Risk Today
0700 EDT Canadian Net Change in Employment and Unemployment Rate
0830 EDT US Nonfarm Payrolls and Unemployment Rate
1500 EDT US Consumer Credit
Wow, what a day yesterday was! We went straight from looking like continued USD bearishness to a very decisive USD bullish day. The most volatile day of the month for the forex market is here today. The Non-Farm Payrolls should be very interesting but will probably feel low key after the big moves yesterday. I expected a mixed reaction to more USD strength and continuation to the upside.
The Forex Daily Outlook for the EUR USD is for continued losses. We had a nice push to 1.4000 and it has now be retraced overnight. This is basically just a necessary correction to yesterdays fall. I expect continuation to the downside to be the easy path for this pair.
The Forex Daily Outlook for the USD JPY is for continued losses. Since hitting the 80.00 area this pair has made great progress back to the downside. The direction is not as obvious as on other pairs but I still believe the highest probability direction is down. I posted USD-JPY analysis yesterday morning that will show the alternate bullish direction.
The Forex Daily Outlook for the GBP USD is for continued losses. This pair is looking for good for bearish continuation. We are on the brink of breaking the neck-line of a head-and-shoulders pattern on the 4-hour chart. When this pattern breaks through the neckline the target would be all the way down to 1.5780. After breaking that level we could see even more bearish acceleration to the downside.
The Forex Daily Outlook for the USD CHF is for continued gains. I agree with Hildebrand’s (Swiss National Bank) comment that the Swiss Franc’s strength is absurd. I’m shorting the CHF with both the USD and the JPY. I think there are tremendous opportunities here. We also could have good longs on EUR-CHF and CAD-CHF but I don’t want those trades to take margin away from more profitable options. The EUR-CHF actually made a new all time low last night. Taking a look at the overnight fundamentals, Swiss CPI Month-over-Month was actually even more negative than expected and Year-over-Year was also worse than expected. We just had a surprise rate cut by the Swiss National Bank and things do not look like they’re getting better.
The Forex Daily Outlook for the AUD USD is for continued losses. I really wanted to see this pair have another high but after we continued lower yesterday it became pretty obvious. It should have been obvious to me earlier but the movements in European currencies were not as decisive. Now the AUD-USD is way down from its highs just as the other commodity currencies USD pairs are. At least I did not have any serious draw down here and my trades especially on the Yen more than made up for it.
The Forex Daily Outlook for the USD CAD is for continued gains. This pair had a huge surge yesterday but I don’t think we can continue the momentum in this pair. We are now in an area with a lot of resistance and parity is just overhead. I think this pair probably needs more time to consolidate but I want to try to be on a move like what happened in 2008-2009 which I think will happen on a larger scale soon.
The Forex Daily Outlook for the NZD USD is for continued losses. I was skeptical of the bearish move in this pair also. It was a pretty normal retracement until yesterday but at least I stayed out of the long side because I knew the downside was basically unlimited. I’m going to try to get in on this pair at a higher price especially since the area it rebounded from is a medium term trend support line. This pair is currently performing better than the AUD-USD but I think that will change over time.