: The markets are absorbing Bank of England and ECB rate decisions that stayed on hold on Thursday, both of which will set the tone for trade in August on Gbp and Eur, as well as mulling Canadian building permits that were very strong, and U.S. weekly initial jobless claims that were very poor at 479K, all of which dropped equity futures lower and strengthened the Usd.
Add in the anticipation of the Reserve Bank of Australia monetary policy statement, and the markets will be thoroughly prepared for Friday's non-farm payroll disturbance.
These will be two of the most pivotal trading sessions that forex traders will have see since Dec. 4 when U.S. employment numbers instigated a volatile period of month-to-month trading patterns that are still creating daily noise.
Global equity markets are continuing their melt-up/melt-down phase, and in the process are revealing that high-frequency algorithms are ruling the roost, with market-makers fighting amongst themselves over bid/ask levels that have few takers except for inter-bank rivals running their own computer coding.
Unless the massive redemption levels by investors pulling record amounts out of the equity markets reverses, the battle of the equity-trading computers will continue to create daily sand-storms that has price action bolting out of nowhere at the open and closes of regional market trade. Current equity and commodity markets are not for the weak of heart.
: Eur/Usd pulled back to test support at 1.3180 after an exhaustion move higher, and now 1.3090 may be seen ahead of the European Central Bank press conference on Thursday. Gbp/Usd is consolidating around 1.5900 and may possibly test 1.5790 ahead of the Thursday BoE rate decision. Aud/Usd is at the beck and call of a red-flag economic week, with a test of 0.9075 or 0.9250 possible.
Usd/Cad is holding steady around 1.02 resistance ahead of Friday employment data. Usd/Jpy is trying to gain ground and test 86.50, and after the last push lower looked very weak as the BoJ fights back against an overvalued Jpy. Usd/Chf is staying volatile and able to give and take against the Usd at will, with sporadic and violent 30-minute periods of trade.
Risk and Demand:
trade broke the 200-day SMA at 1105 as resistance, while crude oil trade signaled long last week. Short-Usd sentiment will be aided by +1125 on the S/P and by +80.00 oil this week.
Marco Hague is one of the founders and principals of The London Forex Broadsheet (commonly known as TheLFB), a global forex trader portal with headquarters in the U.S. Hague began his career with the Bank of England dealing with foreign exchange control, and he has been trading for the last three decades. He has been involved with institutional risk asset ratio analysis and the implementation and maintenance of institutional trade desks globally.