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Market Review: May USA Non-Farm Employment

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Market Review: May USA Non-Farm Employment

Market Review: May USA Non-Farm Employment

Economic calendar (highest volatility): 28th May – 1st June 2018:

Timezone: (GMT -5:00) Eastern Time (U.S & Canada), Bogota, Lima


In the previous week, the United States (U.S) 2018 Federal Open Market Committee (FOMC) Meeting Minutes included some Dovish notes as indicated by the following statement: "A temporary period of inflation modestly above 2 percent would be consistent with the Committee's symmetric inflation objective." This caused the U.S Dollar Index (DX) to moderate midweek onwards from 94.10 to end the week at 93.70. The FintechFX's team view for a slight correction post the FOMC Meeting Minutes was well validated. Similarly, the Great Britain Pound (GBP) also experienced a broad based fall following the series United Kingdom (U.K) specific economic data releases. As an indication of this, the GBP/USD fell by more than 150+ percentage-in-points (pips) last week. 

Nonetheless for this fresh week, the team here at FintechFX opines for the U.S Non-Farm Employment Change (NFP) to bring about the most trading volatility. In addition to this, a 'buy on rumour' move might be present for the U.S Dollar (USD) prior to the NFP release. At the start of the year, U.S Federal Reserve Chairman Jerome Powell indicated that the FOMC could see as many as four Interest Rate hikes this year. In the last FOMC meeting held earlier this month, the benchmark U.S Interest Rate was left unchanged. This indicates for a stronger possibility of an Interest Rate hike to take place during the June 2018 FOMC meeting as inflation levels continue to pace ahead of the 2% mark. 

In addition to the U.S NFP, the team here at FintechFX view two other potential drivers for strong volatility this week namely the Bank of Canada (BoC) Overnight Rate Decision and the three day G7 Meeting which is about to take place midweek onwards. The team here at FintechFX also notes on two First Quarter (Q1) Gross Domestic Product (GDP) releases which are due out of the U.S and Canada. However, the team at FintechFX attribute lesser importance to these numbers as the USD and Canadian Dollar (CAD) will very likely be guided by the U.S NFP and BoC Interest Rate Decision this week. 

The team here at FintechFX note that U.S President Trump's ‘protectionist’ stance and hovering 'geopolitical' issues stand to deter our views. Formerly, U.S President Trump signed a memorandum imposing wide-ranging tariffs of up to U.S$60 billion on China; following previously imposed tariffs on steel and aluminium imports. China has since retaliated with the introduction of it's own tariffs on imports of 128 U.S products. Following this, U.S President Trump further rattled markets by announcing the possibility of an additional U.S$100 billion worth of tariffs to be imposed against China. There is now fresh speculation for U.S President Trump to revive the Trans-Pacific Partnership (TPP) to enact further pressure on China. Meanwhile, U.S President Trump has now rescheduled his meeting with North Korean President Kim Jong-un formerly set in Singapore on the 12th of June 2018.


This week, the NZD/USD presents traders with some trading volatility as the Reserve Bank of New Zealand's (RBNZ) Financial Stability Report is due for release. In addition to this, RBNZ's governor, Adrian Orr will be addressing the marke the very same day the Financial Stability Report is released while the ANZ Business Confidence Index survery will be announced during midweek. This brings about some extra volatility for the NZD/USD for the week. Technically, the NZD/USD is sitting on a strong yearly support line which squeezes between the Fibonacci level of 78.6% as shown in the chart below. The team here at FintechFX opine that positive data releases could once again spark some broad based buying interest for the NZD/USD. 

Technically, the team here at FintechFX views that coupled with good fundamental data, there is a chance for a sell-down to take place for the USD/CAD following the move of USD/CAD to once again test a key long term resistance level. This week, the Bank of Canada will be looking to re-evaluate their Overnight Rate (Interest Rate) once again with the general market expecting a more Hawkish sentiment. That said, the Canadian GDP numbers could be another catalyst to bring strength back to the CAD if results turn out to be largely positive.   

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