On Friday investors’ attention was focused on the US Non-Farm Payrolls report and the performance of the US labour market over the past month. After a disappointing report last month and a string of less than exciting figures out of the US economy during recent weeks investors and traders were looking for the report to breathe some strength back into the Dollar.
What can be taken as a positive signs is that the report didn’t disappoint traders once more but actually confirmed the market’s expectations for a rebound after the previous month’s dismal figures. The US economy added 223k jobs last month and the unemployment rate fell to 5.4% however the average hourly earnings declined 0.1%.
So to summarise the performance of the domestic economy in the States we’d say that the report revealed a moderate rebound but not to an extent that would excite traders and ignite a Dollar rally. The US currency did grab some gains versus its peers on Friday but nothing too exciting, however it will be important to see how the currency markets trade this week.
Even though the US jobs report didn’t provide any reason for a fast and volatile reversal in favour of the Dollar it did reassure traders that a rate hike in the US by the end of the summer is very much on the table and that could translate into slower but steady gains for the Dollar, especially in light of the sentiment bias in the other currencies.
The Euro traded lower on Friday on the back of the moderately good US jobs report and this morning the Single currency is trading around the 1.1150 area. The Euro has come off its 1.1400 highs during the end of last week and at this point the pair looks a bit oversold which could translate to a slight rebound higher today. Nevertheless the sentiment points lower and with no fresh developments in the Greek debt talks we should expect further losses soon.
The Cable remained afloat on Friday after the release of the US jobs report as it managed to hold on above the 1.5400 support area. For the day ahead we could see a consolidation between the 1.5400 and 1.5500 levels but the truth is that the Cable could correct lower after the initial reaction on the back of the Conservative victory. Our focus at this time is on the 1.5400 floor which if broken should clear the road for the 1.5300 area.
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