August’s US employment report front and center

Peter Iosif, ACA, MBA IronFX

August’s US employment report to rock the markets

Market attention today is expected to be on the US employment report for August. The release gains on attention as the Fed’s interest rate decision is nearing. Currently the NFP figure is expected to modestly recover from its drop into the negatives in July, reaching 56k, while the unemployment rate is expected to remain unchanged at 4.1%. Should the rates and figures show a wider than expected tightening of the US employment market, it could enhance market expectations for a tightening of the Fed’s monetary policy and thus provide support for the USD, while at the same time weigh on gold’s price and US equities.

Canada’s employment data to move the Loonie

Simultaneously with the US employment report, we are also getting Canada’s employment data for August. Despite BoC’s interest rate decision showing the bank’s focus on inflationary pressures, the state of the Canadian employment market given also the US-Canadian trade war remains high. Should the data show a tighter than expected employment market we may see the Loonie getting some support, while weaker than expected employment data could weigh on the CAD.

Gold’s price stabilises for now

Besides the release of the US employment report for August mentioned yesterday, we also note the Fed’s intentions as one of the main factors behind the gold’s direction today. Fed Board Governor Waller stated yesterday that he would favour the bank remaining on hold in the September meeting should US CPI rates continue to slow down easing the market’s hawkish expectations for the Fed. It’s characteristic that currently Fed Fund Futures imply that the market marginally expects the bank to remain on hold in September and proceed with only rate hike, instead of two, until the end of the year. Should we see further cooling of the market’s expectations for the Fed to tighten its monetary policy, gold’s price may be allowed to rise again.

Bitcoin defends $81.5k level

Bitcoin was on the rise again yesterday defending the $81.5k level. The crypto-market added about $112.4 billion with falling US yields and easing market expectations for a possible tightening of the Fed’s monetary policy aiding the cryptocurrency market. A possible improvement of the sentiment in the crypto-market, may allow Bitcoin and the wider crypto-market to rise further, given its risky nature.

Other highlights for today

Today we note that BoE Governor Bailey and ECB’s chief economist Lane speak, while we get Canada’s Ivey PMI for August.

Charts to keep an eye out

USD/CAD dropped yesterday aiming for the 1.3730 (S1) support line. We maintain a sideways motion bias for the time being, yet the RSI indicator remains between the readings of 50 and 30, implying a bearish predisposition of the market for the pair. Should the bears take control over the pair, we may see USD/CAD breaking the 1.3730 (S1) support line and start aiming for the 1.3550 (S2) support level. Should the bulls take over, we may see USD/CAD breaking the 1.3880 (R1) resistance line and start aiming for the 1.3990 (R2) level.

BTC/USD rose covering the distance between the 76800 (S1) support line and the 81450 (R1) resistance level. The RSI indicator remains near 70, implying a bullish market sentiment for the crypto king. Yet for the time being we maintain a bias for a sideways motion between the S1 and the R1. For a bullish outlook to emerge, we require a clear break above the 81450 (R1) resistance line and the crypto’s price to start aiming for the 86500 (R2) resistance level. For a bearish outlook to emerge, Bitcoin’s price would have to break clearly the 76800 (S1) support line and start aiming for the 72500 (S2) support level.

USD/CAD daily chart

Support: 1.3730 (S1), 1.3550 (S2), 1.3420 (S3).
Resistance: 1.3880 (R1), 1.3990 (R2), 1.4125 (R3).

BTC/USD Daily Chart

Support: 76800 (S1), 72500 (S2), 69500 (S3).
Resistance: 81450 (R1), 86500 (R2), 90500 (R3).

Author

Peter Iosif, ACA, MBA

IronFX

Mr. Iosif joined IronFX in 2017 as part of the sales force. His high level of competence and expertise enabled him to climb up the company ladder quickly and move to the IronFX Strategy team as a Research Analyst. Mr.

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