Trading plan for 05/10/2018:
Night trade was typical for a day with an NFP report, which means not much volatility. The currency market remained relatively stable, but with an indication of the appreciation of the USD, as the weaker market sentiment encourages us to escape into the dollar. AUD, NZD and CHF are doing the worst. The first two reflect pressure on emerging markets and risky assets. The EUR / USD stopped close to 1.15, with no sign of an advantage. USD / JPY was pushed down to 114 with the correction on the stock market. Wall Street scored a downward trend after 6 days of increases. (SP500 at -0.8% yesterday), which spillover to Asian markets: Japanese Nikkei225 loses 0.6% today. Oil prices bounce after the Thursday correction indirectly caused by signals from Russia and Saudi Arabia, which are ready to partly compensate for shortages of supply resulting from sanctions imposed on Iran. WTI and Brent are gaining around 0.5% today.
On Friday, the 5th of October, the main event of the day is, of course, the NFP-Payrolls data release, together with Unemployment Rate, Average Hourly Earnings and Participation Rate. The other important data scheduled for release today are Canadian Unemployment Rate, Employment Change and Trade balance data, CPI data from Switzerland, PPI and Factory Orders form Germany and Trade Balance data from France.
USD/JPY analysis for 05/10/2018:
Overnight Japan published data on household spending in August. The data turned out to be better than expected, in annual terms they increased by 2.8% with the expected flat result. In monthly terms, the increase was 3.5% (0.4%). This is a survey of both wage-earning and non-working households, such as those classified as single-member, unemployed, or retired. The headline figure is the percentage change in average spending per household from the previous year. Increases in household spending are favorable for the Japanese economy because high consumer spending generally leads to higher levels of economic growth. Higher spending is also a sign of consumer optimism, as households confident in their future outlook will spend more. At the same time, accelerated growth exerts inflationary pressure, which can lead to interest rate increases in the future.
Let’s now take a look at the USD/JPY technical picture at the H4 time frame. The pair was above the level of 114.00, but then it weakened and is now back around 113.90. Nevertheless, the market is still in an uptrend, moving steady inside of the upsloping channel. The nearest technical support is seen at the level of 113.50 and 113.37. The next technical resistance is seen at the level of 114.09 and then at the swing high at 114.55.