Daily Forex Market Preview, 03/08/2018
The U.S. Dollar was seen trading rather firm on Thursday. Lack of economic news flow has shifted focus on the United Kingdom.
The Bank of England hiked interest rates by 25 basis points as widely expected. This brought the short-term interest rates to 0.75%. The central bank, however, signaled that further interest rate hikes would come gradually. The Pound Sterling fell on the back of this news as investors now expect to see the next rate hike in 2019.
Looking ahead, the UK’s services PMI figures will be coming out today. Economists forecast that the services sector activity fell to 54.7 in July compared to 55.1 the month before.
The main focus will, of course, be on the U.S. Nonfarm Payrolls report. Estimates show that the U.S. economy added 190k jobs during the month. The unemployment rate is expected to slip back to 3.9% while wage growth is forecasted to rise 0.3% on the month.
The day concludes with the ISM’s non-manufacturing PMI which is expected to ease to 58.6.
EURUSD (1.1591): The EURUSD currency pair extended losses for a second day as the U.S. Dollar strengthened. Price action is seen pushing lower as the Common Currency is likely to retest the lower support range at 1.1540. While the decline is expected; we expect it to stall somewhere near the support level. The Common Currency is expected to continue maintaining its range within 1.1730 and 1.1540 level in the near term. Any short-term rebound is likely to see a pullback to the 1.1621 level.
USDJPY (111.69): The USDJPY currency pair was seen falling toward the rising trend line before posting a rather strong rebound. We expect the upside to prevail as price action could potentially aim for a retest of the 112.28 resistance level. This is expected only on a close above the previous highs which could potentially build up the bullish momentum. Alternately, failure to retest the resistance level could keep USDJPY subdued with the downside bias likely to increase.
XAUUSD (1207.51): Gold prices extended strong declines on the day as price action fell below the support level of 1219. In the near term, gold is expected to trade sideways as it approaches the 1207 – 1204 region. The round number support at 1200 could keep the declines limited for the moment. Gold is expected to now trade within the range of 1219 and 1200 region. A breakout from this level could, however, set the stage for the near-term direction in price.