Daily Forex Signals 10.07.2017

USD/JPY: Carry trades are back in vogue

Macroeconomic overview: U.S. job growth surged more than expected in June and employers increased hours for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate hike this year despite sluggish wage gains.

Nonfarm payrolls jumped by 222k jobs last month, driven by hefty gains in healthcare, government, restaurants and professional and business services sectors, the Labor Department said on Friday.

That was the second biggest payrolls increase this year and beat market expectations for a 179k rise. The economy also created 47k more jobs in April and May than previously reported. While the unemployment rate rose to 4.4% from a 16-year low of 4.3% in May, that was because more people were looking for work, a sign of confidence in the labor market.

The jobless rate has dropped four-tenths of a percentage point this year and is near the most recent Fed median forecast for 2017. Though the average workweek increased to 34.5 hours from 34.4 hours in May, wage growth remained stubbornly tepid, putting a wrinkle in the otherwise upbeat employment report.

Average hourly earnings increased four cents, or 0.2%, in June after gaining 0.1% in May. That lifted the year-on-year wage increase to 2.5% from 2.4% in May, suggesting some slack still remains in the labor market.

U.S. financial markets shrugged off the anemic wage growth and investors focused on the jump in payrolls, which reinforced views that the economy regained speed in the second quarter after a lackluster performance at the start of the year.

Dovish expectations regarding the BoJ's policy, combined with the rising U.S. yields are supportive of a further yen depreciation against the USD. Today, Bank of Japan Governor Haruhiko Kuroda reiterated the central bank's resolve to maintain its massive stimulus programme until inflation is stably above its 2% target.

Carry trades are back in vogue and that can be seen in the yen's price action today but we stay cautious ahead of Yellen's semi-annual testimony this week.

Technical analysis: USD/JPY bulls have managed a weekly close above 113.38 – 50% retrace of the 118.65 to 108.12 fall. The scope is now for gains through 114.63 – 61.8% of the same 118.65-108.12 drop. 10-day moving average at 113.04 and tankan line at 113.01 are important support levels.

USDJPY Daily Forex Signals Chart

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TRADING STRATEGIES SUMMARY:

FOREX - MAJOR PAIRS:

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FOREX - MAJOR CROSSES:

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PRECIOUS METALS:

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How to read these tables?

1. Support/Resistance - three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL - It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT - It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In - Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor - green "*" means high level of confidence (low level of uncertainty), grey "**" means medium level of confidence, red "***" means low level of confidence (high level of uncertainty)
5. Position Size (forex)- position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) - position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex) - is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) - is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.

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