Talking Points:
– EUR/USD Tumbles to Fresh 2014 Low (1.2954) as ECB Cuts 10bp, Introduces ABS Program
– USD/CAD Inverse Head & Shoulders Pattern at Risk as Bearish RSI Remains Intact
– USDOLLAR Threatens February High (10,724) Ahead of NFPs
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EUR/USD
Even as EUR/USD slides to fresh 2014 low (1.2954), pair remains risk at for further declines as the Relative Strength Index (RSI) pushes deeper into oversold territory.
Euro-Zone’s preliminary 2Q Gross Domestic Product (GDP) report expected to show zero growth; dismal print may heighten bearish sentiment surrounding the EUR/USD as European Central Bank lowers 2014 & 2015 growth forecast.
The DailyFX Speculative Sentiment Index (SSI) suggests a pickup in net-long positioning as ratio climbs to +2.32; favors further decline amid trending market.
USD/CAD
Inverse head & shoulders pattern off of trendline support at risk of being invalidated as it continues to threaten near-term support around 1.0820 (61.8% retracement) – 1.0830 (61.8% retracement); need to continue to see closes above this region to stay constructive on USD/CAD.
Canada Employment expected to increase another 10.0K in August while jobless rate to hold steady at 7.0%; need strong prints to boost interest rate expectations.
Key topside target remains 1.1000 pivot to 1.1020 (23.6% retracement).
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Read More:
Euro Plunges as European Central Bank Cuts Rates, Announces QE
Trade Setups in EUR/JPY, EUR/GBP, EUR/USD Before and After ECB
USDOLLAR(Ticker: USDollar):
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
10721.15
10727.37
10676
0.40
166.06%
Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar Index threatens February high (10,724) ahead of Non-Farm Payrolls (NFP); 230K print expected while jobless rate is expected to slip to an annualized 6.1% from 6.2% the month prior.
Will also keep a close eye on Average Hourly Earnings as wage growth is projected to climb an annualized 2.1% in August versus 2.0% last month.
With RSI holding above 70, next top side objective comes in around 10,756 (2014 high) to 10,759 (61.8% retracement).
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Release
GMT
Expected
Actual
Challenger Job Cuts (YoY) (AUG)
11:30
—
-20.7%
ADP Employment Change (AUG)
12:15
220K
204K
Trade Balance (JUL)
12:30
-$42.5B
-$40.5B
Initial Jobless Claims (AUG 30)
12:30
300K
302K
Continuing Claims (AUG 23)
12:30
2510K
2464K
Non-Farm Productivity (2Q F)
12:30
2.3%
2.3%
Unit Labor Costs (2Q F)
12:30
0.5%
-0.1%
Markit Purchasing Manager Index Services (AUG F)
13:45
58.5
59.5
Markit Purchasing Manager Index Composite (AUG F)
13:45
—
37.7
ISM Non-Manufacturing Composite (AUG)
14:00
57.7
59.6
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— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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Source: Daily fx