USD/JPY Nears 100-DMA

A strong ISM non-manufacturing index put a fresh focus on the November FOMC meeting as a hike possibility. The Swiss franc was the top performer one what looks like it could have been soft intervention while the yen lagged. Australian trade balance is due up next. A new action has been released with a charts note on our existing gold trade for Premium members.

فيديو للمشتركين: "ما بين تقاطع الذهب و الدولار؟" -- الصفقات الحالية و المتوقعة

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The ISM non-manufacturing index rose to the best level since April as it rose to 57.0 compared to 53.0 expected. The employment component was especially encouraging as it rose to 57.2 from 50.7. The one-month jump was the most since 1997. The US dollar rallied in the aftermath, especially USD/JPY. The pair broke above the downtrend since Jan yesterday and continued above the Aug high and is now testing the 100-day moving average at 103.76. That will be critical in the day ahead.

The not-so-good news on jobs was in the ADP employment report, which was at the lowest since April. Private jobs were at 154K compared to 165K expected.

In the grand scheme of things, that's a minor miss and jobs are still strong enough to please the Fed. Given the economic strength, there are fresh questions about a November Fed hike. The market is pricing in a 23.6% chance of the Fed moving 6 days before the election.

Making a move so close to the voting date would prove once-and-for-all that the Fed isn't motivated by politics but it could monumentally backfire if it roils markets and affects the outcome.

Oil also continued higher in the sixth day of gains. The catalyst was the weekly storage data as it showed a fifth straight surprise draw. We wonder whether recent changes in some data collection and recognition from the EIA are a factor but also note that it's usually at this time of year that stockpiles bottom. So far $50 is capping WTI gains.

Looking ahead, the focus is on Australia in the day ahead and the August trade balance report. The consensus in the 0030 GMT report is for a A$2300m deficit. It would take a miss of 400m or more to jar the market.