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US dollar bulls are in control

The US dollar is still catching a bid, and this is putting pressure on the major crosses and commodity prices. Today we have some news at least to see if we can get a catalyst to drive these markets in a more trending fashion.

Market Brief

Today is going to be a much busier day in the markets as the economic calendar has a broad range of data points that could be market moving. Today is the end of the quarter, the end of half-year, and nearing the extended holiday weekend in the USA. US ADP Non-Farm employment change is the data point I personally feel will move the markets most if we get a figure either below 450k or above 750k. The previous figure of 978k is unlikely to get beat and market expectations are for 600k today.

The US dollar index closed above the $92.00 level yesterday and at the London open was trading positively for the day. A couple of closes above the daily 200 exponential moving average and then a break above yesterday’s high will be a clear signal that the bulls are not firmly in control and looking to test higher.

Chinese factory data is pointing towards a slow down as the NBS Manufacturing PMI moved down to 50.9 in June 2021 from 51.0 a month earlier. Raw material costs and disruptions were unhelpful, and output grew the least in four months.

The Office for National Statistics (ONS) reported today that United Kingdom GDP contracted 1.6% in the first quarter of 2021 compared to the prior reading. The UK’s economy remains 8.8% lower than the pre-pandemic levels.

Japanese Consumer Confidence beat expectations and came in at 37.4 versus the expected 34.8 and above the previous reading of 34.1. Industrial Production month-on-month was disappointing, but housing starts year-on-year grew faster than market analysts’ predictions.

The single currency is likely to see some movement today as we have German Unemployment data for June out at the top of the hour and then some flash inflation readings. There is also at least one member of the ECB speaking today.

The ActivTrades sentiment indicator shows that the retail traders are becoming more bullish and for the contrarian, this is signaling a higher possibility of a test lower in the EURUSD. There is a rising trend line that looks like a great initial target for those trading to the downside. March’s swing low would be my second target. I am wrong if the US dollar bears were to find some strength and the EURUSD got its head above the 1.2000 figure somehow.

The Dow Jones Industrial Average is still lagging behind the Nasdaq and S&P500 who have both continued to grind higher making new all-time highs on a daily basis. The DJIA is above the key daily moving averages and if there is to be a day of buying in the equities the falling trendline and 34,500 will act as key resistance today. A break and close higher than that area and the DJIA is looking once again to new highs, a turn at that resistance and we could be quickly looking for the daily 200 ema.

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