On Friday traders were focused on the release of the Non-Farm Payrolls report from the US as it’s not only the most market-moving event of the FX universe but it’s also very critical to Fed’s intention to hike or not rates this month. The initial printing of the number of jobs added in the US economy was a miss, a surprise to the downside that caught investors off guard and the first reaction was to drop the Dollar when the headline number read 173k vs. 217k expected.
However as investors read through the full report and the rest of the employment-related components they realized that there are actually more positive signs here rather than negative: the unemployment rate dropped again and the wage growth rate also picked up, both above expectations. So given the recent string of strong performances from the US labour market the main takeaway from Friday’s event was that the US is going strong and the Fed can all the justification they need to pull the trigger.
As a result the Dollar has been gaining steadily after the report was printed and we could expect more gains from the US currency as the week progresses. Taking a look at the technical outlook of the major currencies, the Euro didn’t break into fresh lows on Friday as the initial reaction from traders was capped by the 1.1100 support area. However with the ECB ready to expand their easing programme and the US economy going from strength to strength the only way for the Euro to go is lower. A successful break of the 1.1100 support floor would clear the path for the 1.1000 and 1.0900 targets.
Cable was more straight-forward on its reaction on the back of Friday’s US jobs report. After the initial knee-jerk reaction to the lower reading of the headline number the UK currency proceeded lower and broke below the 1.5200 support area. However what is important to note here from a technical standpoint is that the Cable has seen no correction rally in 9 days which is a very long period to sustain a trend lower. We need to remain cautious as a correction could come at any point and it would provide an excellent opportunity to sell the Pound against the Dollar on the back of the bearish outlook of the pair.
Disclaimer: The information provided by InvestingBetter.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. InvestingBetter.com are merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite.
InvestingBetter.com and/or its owners will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on InvestingBetter.com. InvestingBetter.com does not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.