With the Japanese calendar virtually empty and the US ISM survey behind us, significant event risk does not enter the picture again until Friday with the Non-Farm Payrolls report. This allows plenty of time for our trade to materialize. Further, the current range has already persisted through a full monthly of US data, lending strength to current support and resistance levels.
Trading Tip – Today’s erratic market environment is not conducive to a range-bound approach. Conservative traders that are intent on following a range-bound approach should be mindful of this when evaluating these trade ideas. In addition to a stop loss, we will look to control risk further by removing any unfilled orders by the end of the week of should spot close above 105.00 prior to our order being filled. Event Risk for the US and Japan US – The week started off with a surprisingly strong ISM Manufacturing report for May. The metric printed 49.6 versus expectations of 48.5 as the weaker dollar boosted export demand. From here, things remain largely quiet for the remainder of the week. The only potential catalyst prior to Friday’s employment report will be a speech given on Wednesday by the Atlanta Fed’s Governor Lockhart as he discusses Japanese trade and investment. The subject matter speaks directly to our trade and any unexpected rhetoric may send ripples through the markets. Finally, Friday brings May’s NFP figure, with a loss of -52k expected after April’s momentous upside surprise (-20k actual versus -80k expected). Japan – While a number of minor releases will flash across the tape throughout the week, no significant event risk is scheduled for this week. To contact Ilya with comments regarding this or other articles he has authored, please email him at ispivak@dailyfx.com