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Dollar Gains Despite Slowing Wage Growth04 February 2019 by Dave Evans

Morning Report: 07.00 London

The dollar index is being pushed higher by follow-on buying on the back of Friday’s Non Farm Payrolls, which saw overall wage growth increase more than expected. ISM Manufacturing PMI also increased more than expected, adding to the positive aspect of Friday. On the negative side, US unemployment rose, with average hourly earnings dropping. The implication being that while jobs may have increased, salaries are lagging.

Dollar pairs are on the back foot, with the AUD/USD set for its second straight day of losses. Australian building approvals came in below estimates this morning.

The EUR/USD reversing Friday’s gains and dropping below resistance at 1.1450 this morning. The GBP/USD is holding up better so far, but this is coming off the back of a poor performance towards the end of last week that has pushed the pair below 1.3100. The EUR/GBP balance is tipping back towards the pound’s favour this morning, but the pair remains above 0.8750.

The USD/CAD has made a small gap higher this morning, arresting last week’s selling which saw the pair tip below 1.3100. The USD/CHF is also making gains and pushing back towards the parity line.

The USD/JPY is higher for the second straight day, having held the 109.00 support level last week. The 2019 opening gap of 110.00 is the next target.

The GBP/JPY is making follow on buying, as is the EUR/JPY, with the AUD/JPY making tentative gains.

Coming up today

There are no middle or top tier economic items today. With US factory orders a small release of note at 15.00.

Trade Idea

The USD/JPY is set to challenge the 2019 opening gap once again and the Non Farm Payroll release could see the pair push through to higher levels.

Dollar Gains Despite Slowing Wage Growth

A good way to play this is a HIGHER trade predicting that the USD/JPY closes above 110.50 in 14 days time for a potential return of 226%.

Dollar Gains Despite Slowing Wage Growth