US Dollar Price Action Set Up for NFP: Two Way Risks for USD


Pre-NFP USD Buying Increases Two Way Risks

Heading into today’s NFP release, pre-positioning has centred around USD buying across the board, with the greenback now above the post-June FOMC highs. That being said, in light of the FOMC’s recent hawkish pivot and the increased weighting of importance on the labour market, which has not yet met the substantial progress goal, today’s NFP data provides good two-way risks for the USD.

The NFP report will be the first since the June FOMC meeting, whereby the bank signalled that it is less willing to run the economy hot, having altered its reaction function and thus raised the importance of economic data going forward. Given the pre-NFP USD buying, bulls will be looking for not only a strong headline figure but also strong details in the report. Should this be the case, the greenback could see 93.00 in short order, while USD longs paired with CHF may be a good expression of a strong NFP report, particularly as CHF net long positioning remains stretched. On the flip slide, in the event that the NFP data disappoints, while USD selling is likely to ensure, my preferred expression would be to look at a pullback in USD/CAD.

Also important to note, that we are heading towards market holiday’s in the US, therefore once the dust settles post-NFP, be on the watch out for possible profit-taking.


US Dollar Price Action Set Up for NFP: Two Way Risks for USDUS Dollar Price Action Set Up for NFP: Two Way Risks for USD

Major FX Option Expiries

EUR/USD: 1.1750 (1.12BLN),1.1800-05 (730M), 1.1820-25 (1.8BLN), 1.1850-55 (2.7BLN), 1.1865 (1.0BLN), 1.1875 (413M)1.1885 (500M), 1.1890-00 (2.36BLN), 1.1915 (1.1BLN), 1.1940 1.2BLN)

USD/JPY: 110.75-80 (1.6BLN), 111.00 (2.0BLN), 111.40-50 (1.78BLN), 111.75 (1.9BLN), 112.00 (478M)

AUD/USD:0.7400 (755M), 0.7500 (463M)

NZD/USD:0.7000-10 (700M)

Market focus on NFP, while pre-positioning raises two way risks for the greenback.
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