Global macro overview for 09/10/2017

Global macro overview for 09/10/2017:

The NFP-Payroll data surprised global investors. The highlight number was worse than expected, (30k vs. 80k0, but that were the only data that did not beat the expectations and can easily be attributed to statistical disturbances related to the effects of hurricanes.The fact that the Unemployment Rate unexpectedly fell by 0.2 percentage point to 4.2% confirms this thesis. The Labor Force Participation widened to 63.1% from 62.9% during the same period to mark the highest reading since March 2014. However, the main point of the report is a wage jump of 0.5% with an additional upward revision of August data (from 0.1% to 0.2%). Together, the data provides the basis for inflationary pressures to increase, as the Fed counts.

In general, the job market data is positive for USD and the US economy. A strong rebound should be expected in October, when hurricanes effects on data will disappear. Nevertheless, Fed Fund futures indicate that the FOMC will stay on hold throughout the first three months of 2018 especially as Chair Jannet Yellen's term is set to expire on February 3, and the committee may largely endorse a wait-and-see approach at the start of the year. The current data are still supporting the possibility of the third interest rate hike in December 2017, just as projected by Fed. This move should strengthen the US Dollar across the board.

Let's now take a look at the US Dollar Index technical picture on the H4 time frame. The market has broken above the technical resistance at the level of 94.16, but reversed quickly towards the support at the level of 93.63. The whole structure looks like an Ending Diagonal pattern and a violation of the level of 93.63 will confirm a further weakness.

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