Global macro overview for 09/04/2018

In general, the currency market has not moved much since Friday because, in the simplest terms, there is not much going on right now. The US labor market report confirmed three things. First, weather fluctuations disturbed employment statistics - which in February boosted the reading (326k), in March brought a correction (103k), but the average for the entire quarter showed a solid 202k gain. Secondly, wage growth accelerates slowly (from 2.6% y/y to 2.7%), not implying a rise in inflationary pressure. Thirdly, together, the data draws a picture of the economy in a state of sustainable recovery, which does not force the change of the strategy adopted by the Fed.

The current climate the US Dollar is still doing quite well. The risk is in check (the US-China dispute can always surprise), which is the worst impact on the main currency basket on AUD. In the local comparison, NZD uses this (less dependence on China, better conditions for tightening monetary policy in New Zealand). CAD is doing well too, especially after a very good job market report on Friday. In addition, the market upholds expectations for the imminent termination of the NAFTA agreement negotiations - Trump is playing a risky game with China, which may affect the support of the autumn elections to Congress and for this reason needs political success on another front.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. USD weakened after the NFP data, although it was more related to previously built expectations (for better result). Nevertheless, the bulls have managed to break out above the technical resistance at the level of 90.47 twice, but the price was pushed back down eventually. Currently, the market is trading close to the technical support at the level of 90.18 and in a case of a further deterioration, the next support is seen at the level of 89.63. The key technical resistance remains at the level of 90.98.

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