Yesterday’s Trading:
The euro/dollar closed slightly down on Friday. Moreover, after the publication of strong NFP data, a long shade appeared on the daily candle. The key currencies were showing mixed movements by the end of the trading session. While one strengthened against the dollar, another weakened, Now I will explain why this happened.
The Non-Farm Payrolls came out better than expected. Job creation in the US non-agricultural sector during December was up by 292k (forecasted: 195k). November’s figure was reassessed up from 211k to 240k, as was October’s from 298k to 307k. The total reassessment was a +50k extra jobs. This is the sort of data the Fed has been hoping for.
US unemployment in December remained at 5.0%, with the index for average hourly wages at 0.0% (forecasted: 0.2%, previous: 0.2%). This indicator was disappointing, but with a 292k NFP, it’s not something to worry about. There was also an increase in the amount of the population becoming part of the work force: a rise by 0.1% to 62.6%.
The euro reacted by falling 63 points to 1.0802. From here the price turned round and headed back up to 1.0929. The NFP is having a short-term effect on the market. The main thing here is to know exactly when to exit the market. By the end of the day, the euro had strengthened against the US dollar due to a fall of European and American stock market indices, in addition to worries of Chinese stock markets opening Monday down.
And that is exactly what happened: the indices opened with a fall. The Shanghai Composite closed down by 2.40% at 3,109 and the Hang Seng fell by 2.45% to 19,952.63. And so because of this, the euro bulls managed to shift the maximum to 1.0969.
Main news of the day (EET):
- 15:15, Canadian new foundations lain for December;
- 19:40, FOMC member Lockhart to speak.
Market Expectations:
The situation for the euro is contradictory. The weekly candle for last week and the break in the trend line on the daily indicate a strengthening of the euro against the dollar, whereas the weekly stochastic for the euro/pound cross on the hourly is indicating a fall.
