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ORBEX

Special Report NFP Trading Guide 7 TH

Of July

ORBEX Research Department

Financial Market today

NFP – Non Farm payroll ; the monthly job data which is released on the first Friday of each

month is due to be released today because U.S. markets are closed on Friday for Independence

day. This week is a busy week with a lot of data was released; so let’s review the current

economies and markets condition.

Recent major economic release and market condition:

For Europe; Inflation is stable. Inflation was stable at 0.5% in June. The fall of food prices offset

the slight increase of energy and core inflation. Going forwards, inflation should remain below

1% for a while, averaging 0.6% this year and being slightly above 1% next year. Moreover, the

jobless rate for Germany still at 6.7% for June, for the fourth consecutive month, standing at a

twenty-year low. The German labor market should benefit further from the current recovery.

Special Report NFP Trading Guide 7 TH Of July

Special Report NFP Trading Guide 7 TH Of July

Japan; Tankan reading signals stabilization, the business condition will record a stabilization

mode on Q3 after a deterioration in Q2. Overall 2013 was a brilliant year for the businesses and

a slight correction on that trend is expected for the current year the reading of Tankan would

make BoJ comfortable with its current monetary policy.

Meanwhile in UK; manufacturing strength .In June, the activity index of the manufacturing PMI

slightly decreased (to 59.4). However the rise in other components augurs well for the future.

The headline manufacturing PMI, up by 0.4 point (to 57.5), reached its highest level since

November 2013.

Special Report NFP Trading Guide 7 TH Of July

In US; ADP has recorded a gain of 281 K employees for the private employers which is the

largest since November 2012. ISM Manufacturing signaled a possible increase in hiring for June.

PMI decreased from 55.4 to 55.3, and the employment component unchanged at 52.8 .The

Philly Fed index showed a positive gains in its employment component, however, the empire

state index recorded a decline.

Special Report NFP Trading Guide 7 TH Of July

ECB;

Investors are also keeping an eye on a European Central Bank meeting later today, although

market participants do not expect the ECB to do much after it eased policy last month.

The focus was on whether the ECB mentions quantitative easing or verbally warns against the

strength of the euro, which has crawled higher against the dollar despite last month's easing.

Last June, ECB has surprised the market was a set of interest rate cut ( Refi rate ; negative

deposit rate , & marginal lending rate ) and a new LTRO to start on September and December.

Draghi also announced also there would be another monetary policy decision to be taken if

needed (QE; as example); would we see today a more decisions to be taken by them to stabilize

the inflation? We think no; especially as we mentioned above, the Europe recent inflation

reading still stable and near forecast mean at 0.5%, Moreover, they still need time to assist the

effectiveness of their recent decisions.

EURUSD against Refi rate

ECB ( Draghi Press conference ) today would speak about the impact of the latest rate cut

decision on the short term , extending the time for lower interest rate , & their expectation for

growth , unemployment , and most important the inflation.

Finally ; Keep in mind that ECB is trying strongly to avoid Japan deflation scenario ; they would

do whatever it takes to avoid it ( not only to save EURO ! ) ; So be alert for any new measures to

be announced even if it is low probability to occur !

Special Report NFP Trading Guide 7 TH Of July

Non-Farm Payroll

Markets expect NFP to record gains of 212,000, which is slightly lower than last month reading

217,000. The unemployment rate is expected with no change at 6.3%. However, the markets

beside these numbers, they are awaiting any development in the participation rate (Review our

previous reports for more information about the participation rate). So how the market would

react to this numbers today; let’s have a technical overview for the market.

Technical Overview

EURUSD

As we can see on the daily chart of the EURUSD; the most expected scenario is the continuation

of the short-term down trend (negative reading) after the market broke the symmetrical

triangle at the level of 1.3777. For that down trend the target (Major support would be at the

levels of 1.3480 and the bottom of the symmetrical triangle 0.33.1. Meanwhile, in case the

opposite scenario (positive reading and break of the resistance at 1.3670) the short-term trend

would continue to target the levels of 1.3800 and later a re-test of the triangles which is broken

later.

EURUSD – Daily Chart

XAUUSD

Gold is weighted by Ukraine and Iraq tensions; However, as we can see in the daily chart. The

market is on declining triangle on the boarder view. The most expected scenario is the market to

reach on the declining line at the major resistance of 1250/1258 .The less expected scenario; is

the declining market and in that condition the market would target 1280 as the major support.

Finally; as the Equity on the all time high ; and expected to continue that up-trend on the short

term ; let’s have a look to the recent correlation between the different markets which would

help you in the decision making during your trading!

NFP ( Navy color ) – S&P 500 index ( Green color ) – Gold ( Yellow color) – EURUSD ( Pink Color )

Prepare by,,

Mohamed Zidan

Chief Financial Market Strategist

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