USD JUMPS AFTER STRONG US ECONOMIC DATA
The US dollar strengthened after strong economic numbers released yesterday. ADP’s non-farm employment data showed that the economy added 230K jobs in September. This was the highest number in seven months and more than the 187K jobs that traders were expecting.
Such data sent US treasury yields soaring due to inflation fears from investors. Employment numbers were followed by PMI numbers that beat analysts’ estimates. The data from ISM showed that the PMI of the services sector rose to 53.9, which was higher than the 52.9 that traders were expecting. The non-manufacturing PMI rose to 61.6 which was higher than the expected 58.1. It was at the highest level since 1998.
The sterling declined sharply against the US dollar. This decline was due to the strong dollar, mixed economic data and Theresa May’s speech at the Tory party conference. Her speech was reviewed by pundits as being sincere and better than her performance in 2017. She talked about the future of UK businesses after leaving the European Union and called for members to support her plan. With no major economic data expected today, traders will focus on tomorrow’s jobs numbers from the US.
The Australian dollar declined to the lowest level since 2016 against the USD. This decline was because of the strong greenback. Earlier today, Australia released trade data. The trade balance rose to A$1,604B, which was better than the expected $1430B.
The EUR/USD pair fell to an intraday low of 1.1470. This was the lowest level since August. The four-hour chart shown below shows that the pair has lost more than half of the previous gains. This price is between the 23.6% and 38.2% Fibonacci Retracement levels. The MACD and the double EMA is showing signs that the downward trend will continue. If it does, the pair will test the 1.1400 support level.
The GBP/USD pair declined sharply to an intraday low of 1.2921. This price is close to the 38.2% Fibonacci Retracement level as shown in the four-hour chart below. The pair’s price is along the lower Bollinger Band, a sign that it is a strong downward trend. The RSI is currently at 29, which is a sign that the downward trend is strong too. Therefore, the pair will likely continue moving lower to the 1.2900 level.
The AUD/USD pair declined to 0.7086, which is the lowest level since March 2016. At this level, the pair found some resistance as shown on the four-hour chart below. The Bears Power indicator shows that bears are still in control. This is evidenced by double moving EMA and the Money Flow Index indicators shown below. Therefore, the pair will likely remain at these low levels. If it crosses past the 0.7085, it will likely continue to move lower.