Dol­lar steady ahead of US non-farm pay­rolls, Gold flat

Financial Mirror (Cyprus) - - WORLD - By Luk­man Otu­nunga, Re­search An­a­lyst at FXTM

The story defin­ing the Green­back’s ag­gres­sive ap­pre­ci­a­tion in re­cent days re­volves around ro­bust eco­nomic data pro­pel­ling U.S. Trea­sury yields to multi-year highs.

Dol­lar strength was a ma­jor mar­ket theme this week as grow­ing op­ti­mism over the strength of the U.S. econ­omy boosted buy­ing sen­ti­ment to­wards the cur­rency. Al­though the rally took a breather Fri­day morn­ing ahead of the U.S. jobs data later in the day, bulls re­main in firm con­trol. With the ADP fig­ures ex­ceed­ing mar­ket ex­pec­ta­tions, there is spec­u­la­tion over the U.S. non-farm pay­rolls fol­low­ing a sim­i­lar pat­tern. A block­buster NFP num­ber com­ple­mented with signs of ac­cel­er­at­ing wage growth could stim­u­late ex­pec­ta­tions over the Fed adopt­ing a more ag­gres­sive ap­proach to­wards mon­e­tary pol­icy nor­mal­i­sa­tion.

Fo­cus­ing on the tech­ni­cal pic­ture, the Dol­lar In­dex re­mains in an up­trend on the daily charts. A solid weekly close above the 96.00 level could in­stil bulls with enough courage to chal­lenge 96.43. Al­ter­na­tively, sus­tained weak­ness un­der 96.00 may trig­ger a correction back to­wards 95.30. trad­ing week for the Pound thanks to Brex­itre­lated un­cer­tainty and po­lit­i­cal drama in West­min­ster.

Al­though

the

cur­rency

has

re­ceived

a slight boost Fri­day morn­ing on re­ports of Ire­land back­ing Theresa May’s Brexit plan, it may be too early to cel­e­brate. Lessons of the past have re­peat­edly taught in­vestors how highly un­pre­dictable the world of Brexit can be. With Brexit fears clearly a ma­jor theme weigh­ing on sen­ti­ment, the near-term out­look for the Bri­tish Pound points to fur­ther down­side. Fo­cus­ing on the tech­ni­cal pic­ture, the GBPUSD has staged a re­bound to­wards the 1.3050 re­sis­tance level. A fail­ure for bulls to se­cure a weekly close above this re­gion could re­sult in the GBPUSD sink­ing back to­wards 1.2930.

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