Markets wait for NFP

Frank Walbaum

Important news this week

Fri, 02nd, 14:30 CET US Nonfarm Payrolls.

Markets wait for NFP as USD pairs reach extreme levels

The market is waiting for the NFP release, with the USD remaining strong. Several USD pairs are now approaching technical resistance or appear stretched on RSI, including EURUSD near its lows and USDCAD near its highs. This could create room for short-term retracements in either direction.
The market expects around 89,000 new jobs, so the reaction could be significant if the actual number deviates from expectations. Stocks are rising across the board, while a stronger AUD points to improving risk sentiment. Most crypto tokens are also moving higher.

Market talk

The NFP reaction could be particularly interesting because positioning already appears stretched in several USD pairs. A softer employment reading could temporarily weaken the Dollar, but that weakness could also attract fresh buyers if the medium-term USD trend remains intact. The initial move and the subsequent retracement may therefore be more important than the first reaction to the headline number.
The broader risk environment is improving into the release. Rising equities and a stronger AUD suggest that investors are currently more willing to take risk, while the recovery across crypto is adding to that picture. The key question is whether the NFP result confirms this improving sentiment or triggers another shift in positioning.

Tendencies in the markets

Equities positive, USD strong, crypto positive, oil weaker, metals positive, JPY weak.

Author

Frank Walbaum

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