Trading plan for 07/07/2017

Trading plan for 07/07/2017:

Overnight the Japanese Yen is clearly loosing, which is heavily tied to the Bank of Japan. USD/JPY established an overnight low below 113.85. EUR/USD is a dozen or more pips above 1.1400 and GBP/USD is moving towards 1.2950. Wall Street ended the session almost 1.0% under the line, the weak sentiment is also in Asia. Despite weakening of the Yen, Nikkei 225 has fallen 0.4%. More modest depreciation is viewed in the Chinese stock markets. WTI oil prices are down 1.3%, the barrel costs less than $45.

On Friday 7th of July will be a super busy day in financial markets because the event calendar is packed with news of crucial importance. Switzerland will release Unemployment Rate and Foreign Currency Reserves report. Germany will unveil the Industrial Production data, together with France, the latter also will release Trade Balance data. The UK will present Industrial Production, Manufacturing Production, and Trade Balance data. Canada will post Ivey Purchasing Managers Index data and Unemployment Rate and Employment Change data. And the last, but not least global investors are anticipating the data from the US job market, namely NFP Non-Farm Payrolls, Unemployment Rate, and Average Hourly Earnings.

EUR/USD analysis for 07/07/2017:

The US job market data are all scheduled for release at 12:30 pm GMT. The Non-Farm Payrolls Change is expected to increase from 138k to 175k. The Unemployment Rate is expected to stay unchanged at the level of 4.3% so any tick down here will be a positive surprise. However, the biggest attention will be focused on Average Hourly Earnings as they are expected to increase from 0.2% to 0.3% on a monthly basis and from 2.5% to 2.6% on a yearly basis. Nevertheless, after yesterday poor ADP Non-Farm data that missed the expectations (158k vs. 184k expected, 230k prior) the US job market data might disappoint again this month. Importantly, the current negative sentiment response towards the US Dollar that dominated the financial markets after the ADP Non-Farm data might be slightly diminished as last month ADP strongly missed the NFP, so some investors may not treat it as a reliable indicator. Moreover, most market participants will be focused on wages as any increase in wages will be considered as a good sign for the inflationary pressures, which in result will make a good justification for yet another interest rate hike by the FED later this year.

Let's now take a look at the EUR/USD technical picture on the H1 time frame. The pair has clearly broken out of the channel and currently is trading around the recent swing high at the level of 1.1444 in overbought market conditions as it awaits the data release. The next technical support is seen at the level of 1.1388 and 1.1355, but if the NFP data is better than expected, these two supports might be easily violated. The next much more important support is seen at the level of 1.1295.

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Market Snapshot: Fat finger caused a flash crash on Silver?

During the Asian trading session, the Silver market collapsed quickly from 16.16 to 14.41 in a matter of seconds. Nevertheless, the market quickly returned to the previous levels and currently is trading back around the level of 15.88. During today's session, a further appreciation of the silver price is expected and the level of 16.16 should be tested or even violated soon.

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Market Snapshot: USD/JPY is trading near the channel resistance

The price of USD/JPY has managed to move higher towards the upper channel line around the level of 113.68 despite the clear bearish divergence. However, the momentum is clearly softening, so this move up might be the last one before the important data release later during the US session. The importnat techcnial support is seen at the level of 112.92 - 112. 74 and the next importnat resistnace is seen at the level of 114.34.

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