After last week’s major economic data in the developed world, including the highly-anticipated ECB meeting and U.S. Non-Farm Payroll report, some traders may shift their focus back to emerging markets this week, where by far the biggest star (as always) will be China.
After Thursday’s bombshell drop in the greenback, U.S. dollar bulls are starting to peek their eyes back out of their bunkers to see that the terrain is much the same as it was before; most importantly, the Federal Reserve is still very likely to raise interest rates next week, in sharp contrast to the easy (and growing easier) monetary policy across the rest of the developed world.
After yesterday’s massive Europen Central Bank-induced moves across all markets, traders were a bit shell-shocked heading into the always important Non-Farm Payrolls report. Today’s jobs report was even more highly anticipated than usual because it represented the last major U.S. economic release ahead of the Fed’s December monetary policy meeting, where the central bank is mulling its first interest rate hike in nearly a decade.
Yesterday, we asked whether Saint Draghi would bring a shiny new present or a lump of coal to expectant EUR/USD bears.
Today we learned that the bears must have been much naughtier than they had thought, as all they found this morning was two particularly small and unimpressive lumps of coal in the bottom of their stockings.
The weekly AUD/USD chart (below) looks stronger than it has at any point in the last year. As of writing, the rates are breaking above a 14-month bearish trend line near .7200 and approaching a three-month high around the .7400 handle. Meanwhile, the weekly RSI and MACD indicators have both turned higher to hit their highest levels in over a year.
After a broad-based dip at the start of the U.S. session, the greenback has come storming back over the last few hours. Naturally, this has caused the earlier bounce in EUR/USD to fade, though USD/JPY hasn’t seen much a corresponding rally.
U.S. traders are dragging themselves to work for a holiday-shortened week, though they are likely to have increasingly urgent daydreams about Thursday’s coming gluttony and tryptophan-induced afternoon naps as the week goes on.