Asian shares fell on Friday after U.S stocks ended flat yesterday as investors act cautiously ahead of the monthly U.S Payrolls Data which will be released later today. Data on the number of new jobs added, the unemployment rate and average hourly earnings are considered as one of the keys to assess the possibility of a Fed interest rate hike at the end of this year.
The MSCI Asia Pacific Index shed 0.4 percent. New Zealand’s S&P/NZX 50 Index slipped to its lowest since July and Hong Kong’s Hang Seng Index retreated from four-week highs. The British Pound was on the path to recovery following a collapse in early Asian trade. Sterling plunged to around $1.20000 after French President Francois Hollande stated that the U.K had to suffer the consequences of a departure from the single market, otherwise, other countries would follow Britain and attempt to leave the EU.
Explaining the freefall in the market, traders supposed that it was largely due to computer-driven orders that triggered and exacerbated the plunge, especially when the market was in a period of low liquidity. No matter what the cause, sterling recorded the biggest loss among major currencies versus the U.S dollar and the steepest one-day decline since the June referendum.
Besides the closely watched jobs data, a number of Fed officials including Cleveland Fed President Loretta Mester and Fed Vice Chairman Stanley Fischer are scheduled to speak later today. The second presidential debate between Hillary Clinton and Donald Trump will take place on Sunday. The US markets shall be closed on account of the Columbus Day holiday on Monday.
EURCAD has been on a steady decline after consistently failed attempts to breach the key resistance at 1.48000. The pair may continue to slide deeper as the RSI is pointing downwards to the oversold zone. The short-term MA20 has just crossed the long-term MA50 from above further consolidating the downtrend towards the 23.6% retracement level. The price action broke through both the MA’s from above previously and both MA’s are now placed above the price action.
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EURUSD is about to break out of the shrinking trading range within which it has been stuck for five months. The pair is likely to make a breakout to the downside and could be headed towards the 50.0% retracement level at 1.10572. With the short-term MA20 converging with the long-term MA50 from north to south, and the RSI falling to as low as 37.45, the downtrend is confirmed.
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USDJPY has neared the last cycle’s high at 104.300 and may form a double bottom pattern if the pair can surpass this level. The uptrend has been supported strongly as the price action has crossed through both the MA’s from below, while the RSI index has soared as high as 64.59. The next key resistance to test is the 23.6% retracement level.
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Silver is set to post the biggest one-week loss since April 2003. From near the 23.6% Fibonacci retracement level, the metal has consistently broken through two more major supports at the 38.2% and 50.0% levels, and has consequently fallen into the oversold territory. Silver is expected to trade in a thin range before being affected by the fundamental side. In case of an overwhelming bearish force, the metal may hit the 61.8% support level. The RSI and the ADX are both indicating a sideways to lower move for the moment.
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WTI crude prices have surged more than 17% since it rebounded from the support at 43.00. The rally has brought the commodity near the overbought zone and the price is attempting to retest the resistance at 51.65, which is also the highest since July 2015. The ADX has soared to a reading of 40.76, suggesting a strong uptrend. The RSI is near the overbought zone but not quite there yet suggesting room for some further up-moves.
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The SP500 has been trading sideways within a narrowing range. As can been from the ADX chart where the index has retreated to as low as 13.91, no clear trend is being formed in the market. The RSI is swinging back and forth around the 50 line, suggesting consistent whipsaw action in the price moves. With the job data coming out later today, the index can break out in either direction.
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