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NFP Data Release Summary
In a week marked by optimistic shifts, The overall mood of the market has improved significantly, mainly influenced by the latest non-farm payroll data. Last Friday’s report revealed a net increase of only 187,000, a figure lower than anticipated earlier in the week, indicating a cooling off of the US economy. This development significantly diminishes the likelihood of further rate hikes by the Federal Reserve in the near term. This cooling effect was further underscored by lower-than-expected US GDP data earlier in the week, which came in at an annualized rate of just 2.1%, and a meager average hourly earnings increase of 0.2%.
As September commences, major market players are expected to re-enter the market on a larger scale, a factor likely to benefit the bulls.
Adding to the increasing risk-on sentiment, the US core PCE price index data did not surpass expectations, maintaining a monthly increase of 0.2%.
The past week also witnessed the US Dollar maintaining its strength, while several commodities experienced a rise, most notably WTI Crude Oil, which reached a new multi-month high price.
The past week has brought a series of data suggesting a cooling off of the US economy, thereby reducing the chances of further near-term rate hikes by the Fed. This, coupled with the onset of September and the return of major market players, seems to be working in favor of the bulls. Additionally, the steady US core PCE price index data and the continued strength of the US Dollar, alongside the rise of key commodities, signal a shift towards a more risk-on market sentiment.
Fundamental Weekly Outlook: 4th – 8th September, 2023
The upcoming week in the markets is expected to experience a significant surge in volatility compared to the previous week, as the summer season draws to a close and the market reverts to higher volumes. The key data releases for this week, ranked by their level of importance, are as follows:
Weekly Technicals Outlook: USDJPY and EURJPY
USDJPY
The USD/JPY last Friday close formed a bullish rejection candlestick with a huge wick tapping the 144.800 weekly support area, showing that the long-term bullish trend which has been running since the start of 2023 is still in place overall.
Despite the range within the last 2 weeks, the price action is still quite bullish, with the price having retraced little from recent daily highs.
Overall USDJPY is still a long-term buy due to the very loose monetary policy of the Bank of Japan, as well as the long-term downward trend of the Yen.
Looking at the USDJPY H4 Chart. We see a bullish engulfing candle invalidating multiple bearish candles. I would cautiously wait for a daily close above the 147.300 area, As highlighted on the chart above the previous daily highs. Before entering a new long trade to 148.700.
EURJPY
Last Week on EURJPY we saw a bearish impulse from 159.500 to H4 support of 157.450. Moving forward to the current week with all the data and fundamental news coming up, I would proceed with caution. However with the proper technical outlook of the pair overall, I am expecting corrective moves to the upside creating new highs.
The above EURJPY H1 Chart after the market opened on Monday 04/09/23 shows a clear break of 157.950 previous minor resistance. This is a clear sign of market-respecting structures. A Long trade to 158.700 and 159.450 can be archived in a short term. So keep in mind with all the news coming up anything can happen.
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