Risk-off on US-China Headlines, US NFPs and ISM Index in Focus

China’s Doubts Dent Market Sentiment, US NFPs and ISM manuf. Enter the Spotlight

The dollar traded mixed against the other G10 currencies on Thursday and during the Asian morning Friday. It gained against AUD, NOK and SEK in that order, while it underperformed versus JPY, GBP, CHF, and NZD. The greenback was found virtually unchanged against EUR and CAD.

AUD/JPY — Technical Outlook

Overall, AUD/JPY continues to trade above its tentative upside support line drawn from the low of August 25 th. But the pair had distanced itself quite a bit from that line recently. Yesterday, after finding strong resistance near the 75.30 hurdle, AUD/JPY sold off strongly and fell below its 21 EMA. Such a move increases the chances of another possible slide, at least in the near term. But let’s not forget that this move lower could still be part of a larger correction, as long as the pair remains above that upside line. This is why, from the short-term perspective, we will take a cautiously-bearish position and aim a bit lower.

NZD/USD — Technical Outlook

After a calm start this week, it was unclear which way NZD/USD might end up going. But on Wednesday the pair exploded to the upside and continued to move higher yesterday. This move got the rate close to its key barrier, at 0.6435, which finally got tested during the early hours of today. Once again, the 0.6435 hurdle kept NZD/USD down. But this could just be a temporary occurrence, as the pair may go for a small correction down, before another leg of buying. That said, before getting comfortable with higher areas, a break of that hurdle is needed, hence why we will stay side-lined, for now.

As for the Rest of Today’s Events

Apart from the US employment report and the ISM manufacturing index, we also get the UK manufacturing PMI for October, which is expected to have slid to 48.1 from 48.3, and the US final Markit PMI for the month, which is expected to confirm its preliminary estimate of 51.5.

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