Forex Notes

The NFP Payroll numbers came in worse than expected - 0 after a forecast of 74K. July's number was revised down from 117K to 85K. This data definitely invites risk aversion, but the reaction for the USD was schizophrenic. After initial strength, USD -weakness took over, only to now result in a third reaction back to USD-strength. The CAD (which suffers if USD suffers) however is holding it's weakness without such shake-outs.


The EUR/USD will show true bearish continuation colors if it slides below 1.42. That opens up 1.4070-1.41, then 1.40. A break above 1.43 however, builds a temporary low for a pullback to test the 1.4350, 1.44 pivots.



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GBP/USD is volatile too, but is looking at the 1.6110 August-lows in the nears-term, a Break below 1.61 opens up 1.60. Only a break above 1.63, 1.6350 should signal a raally back towards 1.66 August highs.

AUD/USD and NZD/USD are also whipping back and forth as this update is being prepared.

USD/CHF remains bearish below 0.80, but a break above 0.7850 might just go ahead and test that resistance. A break below 0.77 opens up 0.76 in the short-term.

USD/JPY is ranging with bearish bias in the medium term. In the short-term, it looks to be reversing a bearish move, but only a break above 77.00 opens up some short-term bullish outlook. Still USD/JPY continues to be susceptible to being faded towards 76 while it is still under 78. Above 78, we might be building a bottom, but even that can take a long time.


CAD- crosses however are holding its weakness without as much whipping as the USD-crosses:

USD/CAD might be heading towards parity or at least 0.9950 if it can close today above 0.9850. Let's see if the 0.9780-0.98 zone holds as support, if it does, the bullish scenario is still strong.

CAD/JPY is heading back to 97.00 low after a failed bottoming, rejected by the 99.00 resistance. A break below 97.00 opens up 95.00 as a range breakout projection to the downside.

EUR/CAD has been sliding up to today. If we bottom however, the rally can still be a correction. Closing above 1.40 can push towards 1.41-1.4150 pivots, but strong resistance is there.

GBP/CAD (not shown here) has also been sliding, so EUR and GBP are not good pairs to get at CAD-weakness, since its just comparing weak with weak. (JPY however should be strong in risk aversion). GBP/CAD.

AUD/CAD bulls are just continuing upside trend if CAD is weak. AUD is not so strong in risk aversion neither, but has been resilient. Trading at 1.0480, the 1.05-1.0550 area is already resistance. Only a break above 1.0550 suggests medium-term rally,

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Fan Yang CMT
Chief Technical Strategist