FX Breakout Monitor: USD picture stays muddy after US jobs report FX Breakout Monitor: USD picture stays muddy after US jobs report FX Breakout Monitor: USD picture stays muddy after US jobs report

FX Breakout Monitor: USD picture stays muddy after US jobs report

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  The USD weakness in the wake of the FOMC meeting fizzled a bit into today’s trading and the US jobs report hasn’t done much to clarify the situation as we await the daily and weekly close levels and look forward to a busy week for AUD on Tuesday’s RBA meeting.


For a PDF copy of this edition, click here.

The USD picture is clear as mud at the moment – with recent commodity dollar breakouts versus the greenback not seeing further progression today and USD/EM trade consolidating after their recent big run lower. The US jobs report today was rather positive, with a new five-year high in the participation rate (long time unemployed returning to the work force) and payrolls beat, although earnings growth was a bit more sluggish than expected. 

Next week could prove pivotal for the Aussie, with a Reserve Bank of Australia meeting up on Tuesday and the market very curious whether the bank will alter its guidance in recognition of rapidly falling Australian housing prices. Still, with Aussie and elsewhere, the risk for low energy levels in EM is prominent if the market is taking its cue from China, as markets there are closed all week for the New Year holiday, and as we continue to wait for the outcome of US-China trade negotiations.

Today’s FX Breakout monitor

Page 1: The big JPY crosses continue to avoid sending clear break signals as USDJPY bounced after the initial sell-off in the wake of the Federal Open Market Committee meeting and EURJPY can’t decide what to do around 125.00. NZDUSD, AUDUSD and USDCAD all broke out this week – watching the close today and action early next week to see if these amount to anything or are rejected.
Source: Saxo Bank
Page 2: Finally a bit of consolidation in the USD/EM trades – wondering if the energy there ebbs out next week after a strong bounce in USDCNY today. EURSEK recently poked above key resistance but has yet to extend, while NOKSEK has pulled sharply higher and was a great breakout/trending trade that is now getting a bit stretched and looking at the 200-day moving average.
Source: Saxo Bank
Chart: USDCAD

We haven’t covered USDCAD recently, which has broken lower in line with the breaks (higher) in AUDUSD and NZDUSD – clearly a lot of correlation in these pairs at the moment on hopes that the recent FOMC will provide a fillip for global risk sentiment and even economic growth. The pair have managed to trade up against the 200-day moving average today and even below – which also coincides with the 61.8% retracement level of the rally wave since last October. So this level important on daily closes from here. Looking lower, structurally speaking, the 1.3000 looks pivotal as the pair will likely take its cue from risk appetite, with USD weakness on further strength in global equity markets.
Source: Saxo Bank
REFERENCE: FX Breakout Monitor overview explanations

The following is a left-to-right, column by column explanation of the FX Breakout Monitor tables.

Trend: a measure of whether the currency pair is trending up, down or sideways based on an algorithm that looks for persistent directional price action. A currency can register a breakout before it looks like it is trending if markets are choppy.

ATR: Average True Range or the average daily trading range. Our calculation of this indicator uses a 50-day exponential moving average to smooth development. The shading indicates whether, relative to the prior 1,000 trading days, the current ATR is exceptionally high (deep orange), somewhat elevated (lighter orange), normal (no shading), quiet (light blue) or exceptionally quiet (deeper blue).

High Closes / Low Closes: These columns show the highest and lowest prior 19- and 49-day daily closing levels.  

Breakouts: The right-most several columns columns indicate whether a breakout to the upside or downside has unfolded today (coloured “X”) or on any of the previous six trading days. This graphic indication offers an easy way to see whether the breakout is the first in a series or is a continuation from a prior break. For the “Today” columns for 19-day and 49-day breakouts, if there is no break, the distance from the current “Quote” to the break level is shown in ATR, and coloured yellow if getting close to registering a breakout. NOTE: although the Today column may show a breakout in action, the daily close is the key level that is the final arbiter on whether the breakout is registered for subsequent days.
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.