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Non-Farm Payrolls Passed, BOE Eyed for Possible Rate Cut

 

The Non-Farm Payrolls report surprised everybody the previous week and jumped to 287K for June, up from previous sluggish figure at 11K employment increase in May. Nevertheless, the unemployment rate increased from 4.7% to 4.9%. The US Stocks took the chance given by higher than expected NFP and closed with gains on Friday session. Today early in the morning session the NIKKEI 225 rose by 4 percent following US stocks and as the Prime Minister Shinzo Abe coalition won in upper houses elections. Risk sentiment has recovered amid fading “Brexit” concerns, which has overshooted initially and due to US economy showing some improving data. In the coming week the major event will the Bank of England monetary decision where the central bank is expected to reduce its rate from 0.50% to 0.25%. Mark Carney, head of the BoE said previously that stands ready to cut rates in order to stabilize economy after the “Brexit: vote. The Bank of Canada will also meet this week and is most likely going to keep rates unchanged at 0.50%.

 

The US Dollar remains strong against its counterparties for another week with its gauge, the US Dollar index looking to test nearly 4-month peak at 96.84. During this week we will look at the US CPI, Retail Sales and the Beige Book release. The trend for the index is bullish and we might see some recovery of the Fed rate hike expectations this week amid better jobs report.

 

 

As the risk sentiment has been improving on Monday morning the Japanese Yen was losing territory against the greenback. The USDJPY bounced up from last two weeks lows, from Friday bottom at 100.14 to today’s peak at 101.94. Longer term configuration remains downward. Prices are limited by the 50 Moving Average and downtrend line provides a border line for the upside momentum. Risk appetite s expected to be the main driver for the currency pair today.

 

 

Elsewhere, the British pound the previous week went down to fresh historical lows against the greenback at 1.2805 and is for the last couple of daily sessions hovering above that level. The pound is likely to remain weighed should the central bank cut rates to 0.25%. The EURGBP peaked at 0.8626, the highest since August 2013. The rising configuration is obvious in the price chart however the MACD bearish divergence is clear and weighs on bullish expectations. Recent sideways trading could be considered as a retracement phase, we monitor for either upside breakout at 0.8626 or downside penetration at 0.8490.

 

 

Source: www.fcmforex.com

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