The Week Ahead: Job Security

November 30, 2020

USDJPY Looks for Jobs Volatility

The much-battered US dollar may not be out of the woods yet. Judging by improved sentiment across the board – equities and commodities making new highs, investors are eager to exchange their greenback for riskier assets.

This week’s jobs data could shape markets’ view for the end of the year. A sluggish labor market would dampen the hope of recovery and suggest deeper stimulus down the road. In this case, the dollar may not be able to hold onto the psychological level of 103.00.

The lack of bids could send the pair towards the March low of 101. On the upside, 105.60 is the first obstacle bulls will need to overcome.

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CADJPY Rises Backed by Buoyant Oil Markets

While still trading within a six-month range, the Canadian dollar has held well against the Japanese yen despite mood swings across markets.

The rally in the price of oil above last summer’s high appears to be a key reason for the loonie’s resilience. Traders may expect high volatility this week at the release of GDP and jobs data.

Signs of improvement could lift the hope of a faster economic recovery, thus pushing the exchange rate towards the upper band of the consolidation range.

The pair has found buying interests at the 79.00 support. Buyers will need to lift the hurdle of 81.40 before any meaningful rally could materialize.

EURGBP Retreats as Extra Stimulus Looms

The euro has slowly but surely given back all its gains from early September. Supply and demand seem to have reached equilibrium as traders await a catalyst from either side of the Channel.

Eurozone’s inflation and retail sales data may weigh on the balance this week. Downbeat numbers would raise expectations of additional monetary stimulus at the single currency’s expense.

Meanwhile, there is no sign of a breakthrough in the Brexit talks and the stalemate is likely to keep the Sterling muted. The euro is hovering above the major support of 0.8860 and a bearish breakout could trigger a sell-off into 0.87s.

AUDCHF Grinds Higher Ahead of RBA Meeting

The Australian dollar’s bumpy recovery to last June’s high is a sign that selling pressure has intensified while buyers are looking for fresh catalysts before committing their chips. Similar slow momentum can be seen across equity markets as sentiment cools down.

This week’s data may offer a wake-up call though as the Reserve Bank of Australia holds its last meeting of the year. Hawkish guidance for 2021 could lift the Aussie above the major resistance of 0.6740.

Improved GDP and retail readings may add extra fuel to the rally. On the downside, 0.6510 is the first line of defense in case the actual numbers miss the mark.

By Orbex