The Dollar rose against a basket of currencies on Friday after an unexpectedly small drop in US non-farm payrolls left investors hoping any US recession would prove a shallow one. Labor Department data showed US employers cut 20k jobs in April, marking the fourth straight month of contraction in employment. Analysts have been looking for payrolls to decline by 80k after an upwardly revised loss of 81k jobs in March. The unemployment rate also eased to 5 from 5.1% in March. Latest data supported views that the Federal Reserve would refrain from cutting interest rates again, provided financial markets did not deteriorate further.
News and Events:
The Dollar rose against a basket of currencies on Friday after an unexpectedly small drop in US non-farm payrolls left investors hoping any US recession would prove a shallow one.
News that the struggling economy shed only 20,000 jobs in April also supported views that the Federal Reserve would refrain from cutting interest rates again, provided economic data and financial markets did not deteriorate further. Fed rate cuts totaling 325bp since mid-September have eroded the allure of Dollar-denominated assets to investors seeking higher returns, undermining the Dollar against the high-yielding Euro, Australian and New Zealand dollars.
Labor Department data showed US employers cut 20k jobs in April, marking the fourth straight month of contraction in employment. Analysts have been looking for payrolls to decline by 80k after an upwardly revised loss of 81k jobs in March. The unemployment rate also eased to 5 from 5.1% in March.
UsdJpy surged to a two-month peak of 105.70 and was last trading up 0.95% at 105.38. EurUsd fell to 1.5361, the lowest since March 24, and traded back up at 1.5426, down 0.34%. UsdChf rose to a nine-week high against the Swiss franc to 1.0609, before tracking back down to 1.0573, up 0.93%. GbpUsd traded down 0.32% at 1.9713 after posting 1.9898 intraday high.
With economic data continuing to beat market expectations, analysts said it was becoming more likely that the Fed would keep its key overnight lending rate at 2% for a while. This would support the Dollar against the Euro, especially as perceptions rise that the European Central Bank will be forced to ease monetary policy at some point this year amid increasing signs of slower growth in the euro zone.
Today’s Key Issues (time in GMT):
00:00 JPY Market Holiday
00:00 GBP Market Holiday
08:30 EUR May Euro-zone Sentix Index 4.4 vs 4.1
14:00 USD April ISM Non manufacturing PMI 49.1 vs 49.6
14:00 DKK April Currency reserves previously 179.7B
The Risk Today:
EurUsd: Euro has been weaker for the last two weeks and recently broke 1.5528 former support. Medium term trading range is still set between 1.5400 � 1.5800. Psychological 1.5000 key level marks strong support before 1.4500 pivot point. Pivot point hold 1.6000 resistance ahead of key resistance 1.6200 market target. Initial resistance hold 1.5528 former support.
GbpUsd: Cable is trading around 1.9800 consolidation level and hit Friday 1.9705 low. Further pressure below 1.9800 may open the way down to 1.9337 January low and 1.9105 (50% retracement of 1.7049 � 2.1162 advance). Renewed strength may reopen the way toward 2.0000 psychological level. Actual trading range is 1.9600 � 2.0000.
UsdJpy: Recent 1 �-month uptrend open the way over 105 on Friday. This could bring further advance till 110.10 strong (Trendline) resistance and mid January double top ahead of 111.92 early January high. Profit taking or return below 105 might lead the way down to 100 � 103 consolidation trading range. Minor support holds 102.95 early April high.
UsdChf: Market broke up 1.0500 last Friday, the highest in the last two months. A return below 1.0500 may reopen the way down 1.0200 and toward 0.9639 17th March low. Current uptrend looks set up over 1.0200 former resistance. Early January double top 1.1191 marks strong resistance.
Resistance and Support:
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland