Market Update – January 10th, 2017

Market Update – January 10th, 2017

Friday’s NFP (Non-Farm Payrolls) release came below expectations but the previous release was revised higher. It was enough for traders to buy the U.S. dollar for the end of the week.


However, this lasted exactly twenty-four hours, and in some pairs even less, as Friday’s NFP moves were completely reversed in most of the cases. The EURUSD managed to reverse completely to above 1.0620 while the USDJPY gave up it’s Friday’s gains as well.


With little or no important economic data to be released this week, technical analysis and Trump’s tweets should move markets. But all these doesn’t make the week being less important!


Perhaps there is no other major pair that was so resilient to the NFP than the AUDUSD pair. It dipped only about 40-50 pips and then by the time markets opened on Monday it rebounded and took the NFP highs.


The reason seems to be a fundamental one, as over the weekend chatter from China calling from larger demand for Australian commodities supported the pair. Gold trades aggressively higher as well, now above $1800, and this puts a floor on any bearish move in the Aussie pair.


However, from a technical point of view, the pair is still bearish and we should expect it to deal around 0.71 or even lower sooner rather than later. With Mr. Trump’s election in the United States, the AUDUSD started an impulsive move and now corrects the first wave.


It is unclear if the second wave that forms right now is a simple or a complex correction, but in both cases, it should not matter as the move to follow should be a bearish one.


Considering the reaction post the NFP release, one may say that it was a non-event. In some cases this was true, but in some other cases, the U.S. dollar took quite an aggressive stance. The perfect example is the GBPUSD pair.


Over the weekend, Theresa May, the U.K. Prime Minister once again called for a hard Brexit. The fact of the matter is that no one knows how the Brexit situation will unfold as the Article 50 was not triggered yet and negotiations with the EU didn’t event start.


Because of this uncertainty, every time a serious discussion about Brexit starts, the GBP is being hit. Needless to say, the GBPUSD was unable to reverse the NFP move like the EURUSD and AUDUSD did.


Moreover, the EURGBP cross moved aggressively higher, to levels not seen in almost two months. Expect the same play on the GBP to continue the more we get closer to the Article 50 triggering deadline.

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