NASDAQ Composite (.IXIC) US job gains weaken case for big Fed cut
The dollar rose broadly on Monday after strong U.S. jobs growth in June suggested the Federal Reserve will not aggressively cut interest rates later this month.
U.S. nonfarm payrolls rebounded in June to 224,000, the most in five months, data showed on Friday, beating economists’ consensus estimate of 160,000.
The dollar index climbed to as high as 97.443 on Friday, its highest level since June 19, as U.S. Treasury yields rose across the board.
The index, which measures the greenback against a basket of major currencies, was last quoted at 97.215, almost flat in Asian trade on Monday, while the euro traded at $1.1226.
The common currency came under pressure on Friday after data showed that German industrial orders fell far more than expected in May and the Economy Ministry warned that this sector of Europe’s largest economy was likely to remain weak in the coming months.
Against the yen, the dollar advanced to as high as 108.640 on Friday, its highest since June 18. The pair was last quoted at 108.33 yen.
“There is no great urgency for the Fed to act, and surely not by the half a percentage point move,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.
As traders’ focus quickly shifted to Federal Reserve Chairman Jerome Powell’s Congressional testimony, due on Wednesday and Thursday, Chandler said it might be too late to persuade the market that the Fed will not cut rates now.
“But Powell can lean against the idea that the Fed will cut rates 75 bp this year, by emphasising the still robust expansion, strong financial conditions, and perhaps couching a cut in terms of ‘insurance.'”
The British pound hit a six-month low to the dollar on Friday, after poor economic data and a rise in expectations that the Bank of England will cut interest rates. Better-than-expected U.S. jobs data sparked a rally in the dollar, adding to sterling’s losses.
Sterling plunged to as low as $1.2481, its lowest since the “flash crash” on January 3 when the pound dropped to $1.2409. It last quoted at $1.2525 .
Elsewhere, the Turkish lira weakened sharply after President Tayyip Erdogan dismissed the central bank governor, sparking worries about the bank’s independence.
The lira slid to as low as 5.8245 to the dollar , its lowest in two weeks, in early Asian trade and last traded at 5.7500, after paring some of its losses.
“The lira took a big hit over uncertainty about Turkey’s monetary sovereignty, coupled with the post-U.S. jobs report dollar rally. I think the knee-jerk reaction is over now,” said Koichi Kobayashi, chief manager of forex and financial products trading division at Mitsubishi UFJ Trust and Banking Corp.
Governor Murat Cetinkaya, whose four-year term was due to run until 2020, was replaced by his deputy Murat Uysal, a presidential decree published early on Saturday in the official gazette showed.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 7,843.05.
The projected upper bound is: 8,411.34.
The projected lower bound is: 7,914.64.
The projected closing price is: 8,162.99.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 92.5593. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 8 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 66.42. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 22 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 119.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 7 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 19 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed down -8.440 at 8,161.791. Volume was 26% below average (neutral) and Bollinger Bands were 1% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 8,033.84 7,865.40 7,515.77
Volatility: 13 20 26
Volume: 700,489,984 576,632,448 599,234,624
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
NASDAQ COMPOSITE is currently 8.6% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into .IXIC (mildly bullish). Our trend forecasting oscillators are currently bullish on .IXIC and have had this outlook for the last 13 periods.