andrewunknown

What to make of the price action on the Majors the last couple of days? The unique combination of Golden Week/May Day-imposed lackadaisicality, pre-NFP apprehension and (what's this?!?) robust US economic releases have caused and coincided with a minor retrace of the dollar-averse market trend that has prevailed since early March. With a top just put in during roughly the last week on USD crosses alleviating the greenback's oversold state, another leg up on soft NFP numbers threatening, USD/JPY likely to cap its corrective rally in the short-term, widely-anticipated further rate hiking in the UK and Europe priced in and the FOMC likely maintaining 5.25% at its next meeting, the dollar is at something of a crossroads.

Any thoughts on what the dollar will do?

andrewunknown

No takers, eh?

Well, tomorrow is the first Friday of the month, and we all know what that means: NFP time, baby!

Judging from consensus estimates and the ADP report (which is generally reliable, but certainly not infallible, as just last month reminds us), I'm anticipating lower than expected numbers. If the print is as soft as the ADP suggests, we could see a retest of the high on Fiber (note that I didn't say "high in fiber", like your multi-grain bread), perhaps a jump back above 2 on Cable, etc.

DailyFX has a nice, succinct description of what's at stake here .

Hype aside, even a dismal NFP will not keep dollar bulls penned up forever. But if the slew of better-than-expected data that we've seen over the past couple of days is counterweighted tomorrow, the FOMC might look to ratchet things a bit tighter, at the very least becoming more dovish in the committee meeting minutes; and that along with likely BoE and ECB rate hikes looming....

Tomorrow will be entertaining if nothing else. I'll be awake bright and early with a Coke and a bowl of popcorn for the show.

Jude

A long on cable for the NFP move for me.

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andrewunknown

Nice pick, and way to trade the news there. The fibo level at 199.17 is capping it for the moment with the bulls chipping away, but it's hard to tell whether there's enough umph to push through. Still, the 8:30-9:00 candle took in about 40 pips.