Non-farm payrolls attraction short lived

Friday’s Non-Farm Payrolls release showed a whopping 287K new jobs causing the Euro to drop 60 pips, but just 60 pips. 

Across almost all major pairs, the U.S. Dollar purchase was short lived as traders took the advantage to reverse their positions and ultimately bet against the Dollar until close.

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NZDUSD Non-Farm Payrolls

Despite selling off on the positive NFP figures, traders were quick to reverse their positions with buying back to pre-NFP levels. The uptrend continued up until close. This whipsaw action could be observed on all the major pairs signalling a limited continuation of the Dollar’s strength.

Aside from Euro Zone and Japanese Yen currencies, this week’s Commitment of Trader report shows an accumulation of non-USD holdings.

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COT Report: New Zealand Dollar
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COT Report: Canadian Dollar
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COT Report: Australian Dollar

These three currencies in particular I remain bullish for the upcoming days and possibly weeks. Current intra-day charting shows good long scalp entries. Meanwhile, I continue to remain bearish on the Euro for the week ahead.

Following up on my breakout pattern analysis, I have redrawn my levels to reflect the current short position I’m holding.

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EURUSD 4-Hour

My first profit taking level is set at the 1.09930~ price area, which sits at the possible fresh support level initially formed on the 27th in June.

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AUDUSD 1-Hour

Taking a look at the first pair in our COT report upload, AUDUSD already broke upwards and is currently experiencing a retracement back to what I deem as the support zone. Provided that this zone holds up, it’s a good opportunity for a long entry. Conversely, depending on the duration this pair sits in the support zone or “stalls”, it signals a loss of momentum and I would be looking to short. However, I do have a bullish bias given the increase in non-commercial long contracts. Earlier last week, the Reserve Bank of Australia saw no need to lower its cash rate for further economic stimulation. In post-Brexit, the Australian Dollar enjoys the gold rally as investors flock to protect against market risk.

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Correlation of AUD and XAU

Overall, we do see a good correlation between the Australian Dollar and Gold over on the daily time frame. Occasionally, we do see a slight off-correlation driven by fundamental differences. Long term, we still remain bullish as Brexit uncertainties cautions global markets.

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USDCAD 4-Hour

Despite its current rally, I’m targeting two potential resistance levels to enter a short position in. Similar whipsaw behavior to the other pairs during Non-Farm Payrolls, the positive news was short lived and quick to sell off. I’m targeting a consolidation break lower with a two part trade entry once when the price plays off either resistance level and once again once price breaks lower from this wedge.

Currently, I am not eyeing any levels for the NZDUSD pair. No clear levels can be determined as the market oscillated with unwanted volatility a bit more than I would have liked.

Furthermore, I place a bit more emphasis on this last month’s Non-Farm Payroll figures as it gives a shocking surprise increase from prior seven months of declining job growth. Despite this increase, the market’s behavior was quick to resume its bearish sentiment on the U.S. Dollar as we’ve observed with the whipsaw action and COT report.

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Non-Farm Payrolls for June, 2016
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