UK Employment data showcases mixed signals

The UK employment data for the month of May was released during today’s early European trading session. The release showcased mixed signals as the unemployment rate accelerated to 4.7% from 4.6% and was expected to remain at 4.6%. Yet the employment change figure which was expected to come in at 46k came in at 134k vastly exceeding expectations and even the prior figure of 89k. In our view we take the unemployment rate as an indication of a loosening labour market as it has been steadily increasing by a rate of 0.1% since February and thus could in turn weigh on the pound.Over in Australia the nation’s employment data for June was release in today’s Asian session and tended to showcase a loosening labour market as well, with the employment change figure coming in at 2k which is significantly lower than the expected 21k figure and the unemployment rate which accelerated from 4.1% to 4.3% showcasing a loosening labour market. In turn this could potentially weigh on the Aussie.In tomorrow’s Asian session, we would like to turn our attention to the release of Japan’s nationwide CPI rates for June. Current expectations by market participants are for the Core CPI rate to showcase easing inflationary pressures with the rate expected to come in at 3.3% which would be lower than the prior rate of 3.7%. Therefore, such a scenario may imply that the bank’s current monetary policy is bearing fruit and further rate hikes may not be currently needed. In turn this could weigh on the JPY. On a political level, President Trump’s ongoing “battle” with Fed Chair Powell raises volatility in the markets.

XAU/USD appears to be moving in a predominantly sideways fashion. We opt for a sideways bias for the commodity’s price and supporting our case is the RSI indicator below our chart, which currently registers a figure near 50, implying a neutral market sentiment. For our sideways bias to be maintained, we would require gold’s price to remain confined between the 3240 (S1) support level and our 3385 (R1) resistance line. On the other hand, for a bullish outlook, we would require a clear break above the 3385 (R1) resistance line with the next possible target for the bulls being the 3500 (R2) resistance level. Lastly, for a bearish outlook, we would require a clear break below the 3240 (S1) support line, with the next possible target for the bears being the 3115 (S2) support level.

USD/JPY appears to be moving in an upwards fashion after clearing our resistance now turned to support at the 147.70 (S1) level. We opt for a bullish outlook for the pair and supporting our case is the RSI indicator below our chart which currently registers a figure above 60 which tends to imply a bullish market sentiment. For our bullish outlook to continue we would require a clear break above the 149.80 (R1) resistance line with the next possible target for the bulls being the 152.75 (R2) resistance level. On the other hand, for a bearish outlook we would require a clear break below the 147.70 (S1) support level with the next possible target for the bears being the 145.25 (S2) support line. Lastly, for a sideways bias we would require the pair to remain confined between our 147.40 (S1) support level and our 149.90 (R1) resistance line.

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Today we get the UK’s employment data for May and HRMC Payrolls change figure for June, followed by the Eurozone’s final HICP rate for June, Canada’s business barometer figure for July, the US weekly initial jobless claims figure the Philly Fed business index figure for July and the US retail sales rate for June. In tomorrow’s Asian session we note Japan’s nationwide CPI rates for June. On a monetary level we note the speeches by Fed Board Governor Kugler, San Francisco Fed President Daly and Fed Board Governor Cook today, and in tomorrow’s Asian session we note the speech by Fed Board Governor Waller.