The Week Ahead – Jobs Numbers To Gauge Wind Direction

By Orbex

EURUSD struggles as US Fed remains unfazed

The US dollar resumes its rally as the Fed maintains its optimism about the economic recovery. The market’s recent jitters are a sign of indecision as traders navigate amid mixed data and statements.

As the spread of the Delta variant is still hitting the headlines, the last thing the dollar bulls want to hear is that the Fed will postpone the tapering schedule as the RBNZ did.

That said, bad news in nonfarm payrolls would be more impactful than good ones as the Fed may call for greater patience at the greenback’s expense.

The pair is hovering under 1.1800. A break below November’s low at 1.1600 could trigger a new wave of sell-off.

XAUUSD weighed down by rising yields

Gold remains under pressure as the prospect of monetary tightening lives on. Being a rather usual antipodean to the US dollar’s movement, the precious metal has much to lose if the Fed goes hawkish.

A rising number of Fed officials have already been considering unwinding the massive QE. That would ease fears of inflation and dollar debasement, which in turn would take away the raison d’etre of gold.

Besides, if investors can harvest higher interests from bonds, why would they stick with the non-yielding metal? If the price fails to clear the key hurdle at 1830, it may revisit the critical support at 1680.

NAS 100 rises ahead of key NFP

The Nasdaq 100 keeps the high ground in the hope that the liquidity tap will not close soon.

The market’s new all-time high is another reminder that the threat of the pandemic is also an opportunity for cloud and digital-focused companies. As counter-intuitive as it may sound, the macroenvironment would remain bull-friendly as long as labor data instill the right amount of uncertainty.

The day the Fed drops the word ‘transitory’ is probably the day the music stops. The tech index is still grinding up along a rising trendline from March 2020.

15800 would be the next stop, with 14800 as new support.

USOIL recovers as demand stabilizes

Oil prices rallied as demand has so far proved to be resilient.

A rise in US fuel demand suggests that the recovery is still on track. In fact, the pandemic situation is noticeably better than last summer.

In China (the world’s largest oil importer) low official figures in new infections brighten up the mood. Concerns about a peak in demand could be an exaggeration. On the supply side, a fall in US crude inventories for a third consecutive week will keep the bears in check.

Technical buying-the-dips at May’s low around 62.00 has put a floor to price action. A close above 69.50 could raise offers back to 74.00, a prerequisite for trend continuation.

By Orbex