Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
You can access both of our platforms from a single Saxo account.
FX Breakout Monitor: USD firm after mixed US jobs report
John J. Hardy
Chief Macro Strategist
Summary: An interesting setup ahead of next week as the USD stays firm near interesting breakout levels into the end of the week after a mixed US jobs report. Sterling also possibly poised for a break if it becomes clear next week that a long further Brexit decision delay awaits.
For a PDF copy of this edition, click here.
The US jobs report didn’t provide any unambiguous signals. On the positive side was the strong bounce-back in payrolls in March (+196k and a +14k revision of prior two months versus expectations of circa +175k) from the very weak February drop-out print of +20k. But a very weak +0.1% month-on-month rise in average hourly earnings has inflation watchers yawning and the participation rate dropping back -0.2% spoils the interesting bounce in that measure in February. All in all, the report keeps the Fed very “patient” and benign, while not showing the kind of weakness that points to a growth slowdown.
Today’s FX Breakout monitor
Page 1: We’re still close to that EURUSD perma-range downside breakout level – seeing is believing there. Elsewhere we note the NZDUSD and GBPUSD pairs for possible significant breaks if USD strength prevails, the former charted below.
Page 1: We’re still close to that EURUSD perma-range downside breakout level – seeing is believing there. Elsewhere we note the NZDUSD and GBPUSD pairs for possible significant breaks if USD strength prevails, the former charted below.
Page 2: AUDJPY worth a look next week if it can clear the bigger 49-day high (given the long established range) and also worth noting the jarring contrast of USDZAR looking lower while some USD/Asia EM is testing topside resistance, including USDTHB.
Gold and silver still suffering near breakout levels as yields rise (although as of this writing they have pushed back lower after two-way post-US jobs report action) and risk appetite is strong, but haven’t quite punched through to the downside – also worth watching early next week.
Gold and silver still suffering near breakout levels as yields rise (although as of this writing they have pushed back lower after two-way post-US jobs report action) and risk appetite is strong, but haven’t quite punched through to the downside – also worth watching early next week.
Chart: NZDUSD
An almost too-well defined range in NZDUSD as we await a USD direction. Will we get any notable USD/Asia or USD/Antipodean action until we see the US-China trade deal announcement, possibly not for many more weeks? In any case, early next week, we will keep an eye on the 200-day moving average and range low here in NZDUSD and note that much of it is being driven by NZD weakness more than USD strength locally – as we noted earlier today, the kiwi now has turned the corner to the downside versus the AUD after the extension of AUDNZD above 1.0500.
An almost too-well defined range in NZDUSD as we await a USD direction. Will we get any notable USD/Asia or USD/Antipodean action until we see the US-China trade deal announcement, possibly not for many more weeks? In any case, early next week, we will keep an eye on the 200-day moving average and range low here in NZDUSD and note that much of it is being driven by NZD weakness more than USD strength locally – as we noted earlier today, the kiwi now has turned the corner to the downside versus the AUD after the extension of AUDNZD above 1.0500.
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.