More reasons for Fed to keep rates on hold

It was rare to see the NFP and unemployment figures released in line with expectations; payrolls at +128K and unemployment at 4.7%. The University of Michigan’s Sentiment survey number was stronger than expected as it fell to 82 vs a drop of 79.1. US ISM Manufacturing posted a less than expected 54.5 vs July 54.7. This is the bottomline: the US economy has showed signs of slower growth, but, so far at least, it doesn’t seem to be moving into recession. My guess is that the Federal Reserve has more reasons to hold interest rates on pause again when officials meet later this month.

USD/CHF approached the daily down trendline at 1.2388, and then succumbed to tremendous profit-taking there to drive the pair to close around 1.2300. Was a good place to short there because no traders would initiate positions outside of that high over the long weekend holiday with US and Canadian markets closed on Monday for Labour day.

ECB’S president Trichet spoke yesterday again, and continued his upbeat tone, reiterating that he sees a favourable growth momentum in the Eurozone, and that short-term Eurozone prospects are favourable. Another hint of an upcoming rate hike from the ECB.

The Japanese yen remained weak as the market continues to lower its expectations for a rate hike by the Bank of Japan, and as yen-funded carry trades regain popularity. Right now, USD/JPY is lying right on the daily Fib support and hourly up trendline at 117.05. Nearest support is around 116.89, then 116.55.

As for NZD/USD, if it manages to break above 1.6570 convincingly, the next target lies around 1.6685.

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