It feels a bit early in the year for the majority of traders as they just recover from extensive Christmas and New Year hangovers, but we have one of the most important data releases coming out tonight which could have a substantial effect on the way the currencies trade for the first few weeks of the year at least.
We’ve had a bit of a mixed bag of data and sentiment out of the US this week with stronger ISM PMI data curtailed by a less hawkish FOMC minutes which have led to a decent USD sell off over the last couple of days. Now, a lot of the major currencies feel poised to either continue with this recovery and drop back into the ranges or allow the relentless march of the big dollar that we’ve seen since the election result in mid November.
The headline figure of 175k is what everyone will be looking for and with the exception of any bid revisions, I think that a discrepancy of 25k either side could be the catalyst for a decent move.
As usual liquidity will become a bit of an issue for traders as the number approaches and I think the best approach for those looking to trade the event (and many wise heads will be square and happy) will be to look for break trades of good technical levels in the majors – liquidity will be even worse in the emerging market currencies and many crosses.
Looking at my charts as we approach the end of the trading day here in Australia and levels that I’m looking at include:
UsdJpy: Support :115.00
Audusd: Resistance : 0.7365
GbpUsd: Resistance: 1.2435
EurUsd: Support: 1.0540
UsdChf: Support : 1.0080
There’s a fair amount of trading to go before the data but if the market is fairly quiet and these levels are close but not too close, (too close and there is the risk of being stopped into a position in the pre-release liquidity drop-too far and you don’t get to take advantage of the moves momentum) then they should provide good entry levels.
Good Luck to all and have a great weekend!