The Week Ahead: Job Prospect

Will Friday’s jobs data save the US dollar?

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USDCHF Struggles as Sell-Off Continues

The US dollar remains under pressure following the virtual Jackson Hole conference where the Fed announced tweaks to its monetary policy. With target inflation at 2% on average, markets expect the ultra-accommodative stance to stay for an extended period of time.

This week’s non-farm payrolls may lift an over-sold greenback should the data point to a recovery in the job market. However, short-term volatility could reveal those who are waiting to sell the rebound.

The pair is struggling to hold above the key support of 0.9000. The sentiment is likely to stay bearish as long as the price is capped by 0.9200.

EURGBP Drops as Brexit Takes a Back Seat

The wind seems to be turning in favor of the British pound as the euro struggles to push higher. Brexit has so far lost its ability to drive volatility as traders shrugged off the lack of progress in recent negotiations. Despite the risk of a no-deal exit in four months, policymakers and investors seem to be kicking the can down the road.

This week’s inflation data could stir up short-term volatility, though technical range trading may be the name of the game for a few more days.

0.8870 from last May is a key support level to keep the mood bullish. A rebound will need to lift 0.9060 before one can expect a potential rally.

AUDJPY Pushes to 15-Month High

Third time’s a charm as the Australian dollar rose above last June’s high of 76.80 after two previous attempts. Upbeat sentiment has helped the risk-sensitive currency hold the high ground against the yen, aided by hopes of a steady recovery in China, Australia’s largest trading partner. Expectations of full recovery in China’s domestic flights next month further support the bullish case.

Meanwhile, the RBA may stick with its current policy in its September meeting, effectively offering a floor to the Aussie.

The pair is rising along the 30-day MA with 79.00 as the next target. 75.70 is the immediate support in case of a pullback.

CADJPY Inches Higher on Risk Sentiment

Investors’ risk appetite continues to fuel the rally of the Canadian dollar across the board. A steady rise in the price of oil, one of Canada’s major exports, provides firm support to the currency.

Things are rather quiet on the Bank of Canada’s side, and while markets await the jobs data on Friday, technical buying is likely to prevail as the exchange rate grinds toward last June’s high.

81.80 is the immediate target and a bullish breakout could send the pair to 84.50 in a few weeks. On the downside, the area between the psychological level of 79.00 and the 30-day moving average is a major line of defense for the buyers.

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