Global macro overview for 07/05/2018

We are opening a new week in a calm climate, but nothing is happening in the markets (especially peace) without end and this atmosphere can be the most deceptive. The US labor market report came out risk-friendly, though it does not take away the vigor of the dollar. Now the marathon of Fed representatives' speech may disturb harmony.

The market showed on Friday that it still has the appetite to buy the dollar. The April NFP report was not particularly favorable, and yet the USD managed to pull itself up after a temporary weakening. We got lower readings for employment and wages, but the devil was in the details. The revision of last month data were up by 30k. The change of jobs in the previous two months was compensated by the weaker April result (164 k, expected 193k), and the unequal wage growth rate was 0.149% (0.2% threshold). Thus, on the one hand, the data were not so weak as to disturb the USD position, but on the other hand, they were not so favorable from the side of inflationary pressure to arouse panic among risky assets. As a result, the USD may still be used to close short positions and/or to open new long ones, but also to avoid the panic that would hit the stock market or risky currencies.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market has made a new marginal higher high at the level of 92.89, but the candle has closed on its lows, which is indicating a supply pressure. The key technical support to the downside is seen at the level of 92.21 and if violated, then the next support is seen at the level of 92.00. The clear bearish divergence between the price and the momentum oscillator support the short-term bearish bias.


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