Most of the major currencies demonstrated growth against the US dollar last week. These included the Aussie dollar ( 0.94%), the Canadian dollar ( 0.89%), the Kiwi dollar ( 0.75%), the euro ( 0.42%), and the Japanese yen ( 0.01%). The only currencies to lose out were the Swiss franc (-0.22%) and the British pound (-0.93%).
Trading on most of these currencies closed down on Friday, with only the Loonie and the euro making gains. Volatility was high during the US session following the release of the jobs report, which showed mixed figures. While the number of new jobs created significantly exceeded expectations, the unemployment rate and average hourly earnings fell short of projections.
304k new jobs were added to the US economy outside the agricultural sector in January against a forecast of 165k. The reading for November was revised from 176k to 196k, and the December reading from 312k to 222k. The aggregate revision amounted to -70k. As such, speculators treated the 304k figure for January with skepticism. Additionally, unemployment rose to 4.0% against a forecast of 3.9%. Average hourly earnings rose by 0.1% in January after an increase of 0.4% in December. The forecast for January was 0.3%.
US dollar bulls were later pleased with the US manufacturing PMI, which posted a rise to 56.6 in January against a forecast of 54.2 and a previous reading of 54.3 (revised from 54.1).
Day’s news (GMT 3):
- 12:30 UK: PMI construction (Jan).
- 12:30 Eurozone: Sentix investor confidence (Feb).
- 13:00 Eurozone: PPI (Jan).
- 18:00 US: factory orders (Nov).
The pair has slid from the 45th degree at 1.1488 to 1.1443. The 45th degree, drawn from the local high at 1.1488, is currently sitting at 1.1434. A support zone runs through this level, which is formed from the trend line. Considering that the hourly stochastic is down, it’s very likely that in the first half of the European session, we’ll see the pair rise to 1.1456. The balance line should shift to this level by 15:00 EET. From here, I expect to see a new wave of short positions on the euro, with a target of 1.1408. Sellers won’t want to see the rate go above the LB line. For today, I can’t see the rate dropping any lower than 1.14.