06/02/2023 Daily Reports
- EUR/USD comes under further downside pressure and rapidly gives away the initial optimism, returning to the mid-1.0800s in the wake of another stellar print from the US jobs report on Friday. It ended the week just below 1.0800, bearish in the daily chart.
- EUR/USD picks up extra selling pressure after the release of the Nonfarm Payrolls showed the US economy added 517K jobs during January, largely surpassing initial estimates for a gain of 185K jobs. In addition, the December reading was also revised up to 260K (from 223K).
- Further data saw the Unemployment Rate ticking lower to 3.4% and the key Average Hourly Earnings – a proxy for inflation via wages – rise 0.3% MoM and 4.4% from a year earlier. Additionally, the Participation Rate increased a tad to 62.4% (from 62.3%). Later, the Institute for Supply Management (ISM) revealed that services industry activity climbed above expansionary territory, boosted by new orders, while prices paid moderated. The ISM Non-Manufacturing PMI rose by 55.2 last month, vs. 49.2 in December and above the 50.4 foreseen.
- The EUR/USD pair is trading near the 1.0795, down for the day with neutral to bullish stance in daily chart. The pair still stabilized between 20 and 50 SMA, indicates neutral strength. Meanwhile, the 20 SMA started turning flat but still developing above longer ones, suggests bulls not exhausted yet. On upside, the immediate resistance is 1.0930, break above this level will extend the advance to 1.1000.
- Technical readings in the daily chart support the neutral to bullish stance. The RSI indicator stabilizes around 50. The Momentum indicator still holds in positive territory, indicating bullish potentials. On downside, the immediate support is 1.0770 and below this level will open the gate to 1.0700.
- GBP/USD nosedives and extended its losses on Friday after a surprisingly strong jobs report from the United States (US) that increased speculations that the Federal Reserve (Fed) could raise rates back above Wednesday’s 25 basis points mark (bps). At the time of writing, the GBP/USD is trading at 1.2060 after reaching a daily high of 1.2265.
- Investors’ sentiment turned sour after January’s Nonfarm Payrolls report was released. Data showed that the economy added 517K new jobs against the 200K estimated; consequently, the Unemployment Rate tumbled from 3.5% to 3.4%. Additionally, December’s data was revised upward, which means the US Federal Reserve still has ways to go to curb stubbornly high inflation towards the 2% goal.
- Earlier in the European session, the UK S&P Global/CIPS Services PMI had its worst month in two years, falling to 48.7, down from December’s 49.9, its lowest level since January 2021. Therefore, the S&P Composite PMI, combining manufacturing and services data, slumped to 48.5 in January from 49.0 last month.
- The GBP/USD offers bearish stance in daily chart. Cable stabilizes below 20 and 50 SMA, indicating bearish strength in short term. Meanwhile, the 20 SMA started turning south and heading towards longer ones, suggests bears not exhausted yet. On upside, The immediate resistance is 1.2150 with a break above it exposing to 1.2260.
- Technical readings in the daily chart support the bearish stances. RSI indicator stabilizes around 40, while the Momentum indicator stabilizes below the midline, suggesting downward potentials. On downside, the immediate support is 1.1840, unable to defend this level will resume the decline to 1.1640.
- Gold price tumbles sharply after the US Department of Labor revealed a staggering Nonfarm Payrolls report that added more jobs to the economy than expected and saw the unemployment rate dip lower. Therefore, the XAU/USD is dropping from daily highs at $1918 and collapsing toward the $1865 area.
- US equity futures remain negative as Wall Street is set to open in the red. The greenback was lifted by a surprisingly upbeat US Nonfarm Payrolls report for January added 517 jobs in the last statement, raising the buck from its ashes, as the US Dollar Index advanced 0.58% and reached a new two-week high at 102.63.
- Delving into the data, December’s report was upward revised from 223K to 260K people added to the workforce. Meanwhile, Average Hourly Earnings rose 0.3%in-line with estimates but below December’s 0.4%. The Unemployment Rate dropped from 3.5% in December to 3.4% and pressured the US Federal Reserve (Fed), as a tight labor market could cause another spike in inflation. In the bond market, US Treasury bond yields, mainly the 10-year benchmark note rate, climbed 12.5 bps to 3.521% after falling towards a monthly low of 3.334% on Thursday.
- Gold price stabilized around 1865, down for the day and neutral to bearish in the daily chart. The gold price stabilized between 20 and 50 SMA, suggesting neutral strength in short term. However, the 20 and 50 SMA continued accelerating north and developing above 200 SMA, indicating bulls not exhausted yet. On upside, the immediate resistance is 1896, break above this level will open the gate for more advance to 1920 area.
- From a technical perspective, the RSI indicator holds below the mid-line and stabilizes around 45, on a bearish strength. The Momentum indicator to the midline, suggests directionless potentials. On downside, the immediate support is 1860, below this area may resume the decline to 1830.
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- The USD/JPY pair catches some bids during the early North American session and spikes to a fresh daily top around the 131.20 region in reaction to the mostly upbeat US employment report details.
- In fact, the headline NFP showed that the US economy added 517K jobs in January, surpassing even the most optimistic estimates. Adding to this, the unemployment rate unexpectedly edged down to 3.4% during the reported month from 3.5% in December. The data further points to the underlying strength in the US labour market, which should allow the Fed to stick to its hawkish stance. This, in turn, provides a strong boost to the US Dollar and is seen as a key factor behind the USD/JPY pair’s sharp rally in the last hour.
- Diminishing odds for an imminent pause o the Fed’s rate-hiking cycle take a toll on the global risk sentiment, which is evident from a weaker tone around the equity markets. This, along with speculations that high inflation may invite a more hawkish stance from the BoJ later this year, underpins the safe-haven JPY and keeps a lid on any further gains for the USD/JPY pair.
- The USD/JPY pair stabilized around 131.20, up for the day and neutral to bullish in the daily chart. The price broke above the downward bearish trend line and develops above 20 SMA, suggests diminished bearish strength in short term. However, 20 SMA continued accelerating south and developing below longer ones, indicating bears not exhausted. On upside, overcome 131.60 may encourage bulls to challenge 132.80, break above that level will open the gate to 134.50.
- Technical indicators still suggest the neutral strength. RSI climbs to around 50, while the Momentum indicator stabilizes just below the midline, suggests modest downward potentials. On downside, the immediate support is 130.50, break below this level will open the gate to 129.00 area.
- DJI still in the familiar range, tumbled to intraday low 33816 area and then jumped to intraday high 34226 area. It ended the week around 33950, slightly down for the day and indicates bearish sign in the hourly chart. Right now market is standing below 20 and 50 SMAs, suggests bearish strength. Meanwhile, 20 SMA started turning south and heading towards 200 SMA, suggests bears not exhausted yet. On upside, overcome 34230 may encourage bulls to challenge 34400, break above that level will open the gate to 34680.
- Technical indicators also suggest the bearish movement, developing below the mid-line. RSI stabilized around 46, while the Momentum indicator hovering well below the midline, suggests downward potentials. On downside, the immediately support is 33800, break below this level will open the gate for more decline to 33580 area.
- The Brent still under the sell pressure on Friday, dropped from intraday high 84.20 area to low 79.70. It hold near the bottom to ended the week. The price still stabilized below 20 and 50 SMA, suggests bearish strength in the hourly chart. Meanwhile, the 20 SMA continued accelerating south and developing below longer ones, indicates bears not exhausted yet. On upside, overcome 81.30 may encourage bulls to challenge 83.30, break above that level will open the gate to 84.20.
- Technical indicators also suggest bearish movement, hovering below the midline. RSI drops to 31, while the Momentum indicator stabilizes in negative territory, suggests downward potentials. On downside, the immediately support is 79.00, break below this level will open the gate for more decline to 77.70 area.
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