Despite this week starting with the Labor Day holiday, things precipitated as we move into the NFP release tomorrow. Monday brought nothing but ranges on the currency market, typically for the NFP week.
The ISM Manufacturing in the United States showed a healthy sector coming to confirm the growth expectations and seal the next Fed rate hike. What’s more important, the employment component showed a strong pick-up, rising to levels not seen in more than a decade.
The USD rallied as a consequence, but with mixed performances on the FX dashboard. One of the primary beneficiaries was the USD/CAD pair that trades around 1.32 at the time this article is written.
Other significant pairs like EUR/USD or USD/JPY, on the other hand, do what they do best: consolidate until the end of the week NFP release.
The dollar’s strength is seen on the crypto market, though. With BTC/USD trading well below the $6500 level, the other USD denominated crypto-currencies followed the same path. This lethargy seen on the currency market is normal for the NFP week. On top of that, a sudden resistance from inside the White House sparked rumors for treason inside Trump’s administration. It isn’t clear how the USD and the stock market will react to Trump’s impeachment if any. Judging by the price action on most USD pairs, the dollar looks for an excuse to move higher.
That’s especially true on the USD/JPY pair that lags the stock indices despite an ongoing correlation that lasted for years. One thing is for sure: as summer trading remains behind us, traders have plenty of things to chew. Fundamental, as well as technical factors, indicate that the lull summer days will be soon behind us.
If the crypto-market tells us something, then beware of the USD strength to extend to the currency market.