More risks to US economic recovery are arising as inflation pressures deepen with an energy crisis abroad might drive crude oil prices to levels that threaten growth, and the battle in Washington DC over the debt will likely go down to the wire when the last cent is almost exhausted around October 18.
On Monday, Fed’s Bullard speaks at the World Strategic Forum and on Thursday will have an appearance by Fed’s Williams at the Business Cycle Dynamics in Open Economies conference.
The Friday’s NFP jobs report is projected to be strong, with 500,000 Americans finding work. September contained the end of pandemic unemployment benefits, but the delta variant affect to the short-term outlook made some employers hold back from hiring. A November Fed taper announcement is broadly expected, with robust employment reports likely accelerating the pace of tapering.
China is on holiday all week until Friday and thus there are no significant data releases this week, and Most Australian banks will be closed in observance of Labor Day on Monday.
Major Currencies Performance and Signals
EUR/USD
The euro fell hard last week, as the bond yield differential between the United States and Germany finally got too wide. We expect the pair to range this week with eyes on Fridays NFP.
FORECAST: NEUTRAL
Resistance: 1.1600, 1.1650, 1.1700,
Support: 1.1550, 1.1500, 1.1450,
GBP/USD
The GBPUSD pair is in consolidation mode at the trend extremes- risk for deeper correction below monthly open. We remain neutral.
FORECAST: NEUTRAL
Resistance: 1.3600,1.3650, 1.3700
Support: 1.3500, 1.3450, 1.3400
AUD/USD
The Aussie pair keeps the latest rebound, grinds higher, after four-month downtrend. New fears for US-China battles, worsening virus conditions join Fed tapering woes to challenge bulls cheering stimulus hopes.
FORECAST: NEUTRAL
Resistance: 0.7300, 0.7350, 0.7400,
Support: 0.7250, 0.7200, 0.7150
USD/JPY
The US dollar has been on an absolute tear against the Japanese yen over the last couple of weeks, and because of exhaustion was likely to come back into the picture eventually. We remain bearish for this week.
FORECAST: SELL
Resistance: 111.50, 112.00, 112.50
Support: 111.00, 110.50, 110.00
USD/CAD
The US dollar continues to bounce around between the 1.25 level and the 1.28 level against the Canadian dollar. The past week has told us that more likely than not we could see a little bit of a pullback, in what would be an anti-US dollar move. We remain bearish this week.
FORECAST: SELL
Resistance: 1.2650, 1.2700, 1.2750
Support: 1.2600, 1.2550, 1.2500
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