Another recession signal as US unemployment rate drops to 50-year low
The EUR/USD pair was unchanged in early trading as traders continued to reflect on the job numbers that were released on Friday. The numbers showed that the US unemployment rate declined to a 50-year low of 3.5%. This was the only good thing in the non-farm payroll data. The economy added just 135k jobs. This was lower than the consensus estimates of 145k. Wage growth rose by 2.9% while the average hourly workweek remained unchanged at 34.4. While a low unemployment rate is mostly a good thing, it should act as a warning signal to traders. This is because all past recessions occurred at the same time as low unemployment rates.
The sterling was relatively unchanged against the dollar as traders continued to focus on Brexit. Just last week, Boris Johnson unveiled his plan, which appeared to receive some support from the conservative party. The proposal was rejected flatly by the European Union. Over the weekend, Johnson urged Brussels to compromise and agree to his plan before the October 31 deadline. The European Union has demanded that Johnson change his plan. After meeting with Johnson’s Brexit negotiator, the European Commission said that the plan did not provide a basis for reaching an agreement.
The price of crude oil was relatively unchanged after Iran received some bad news. Over the weekend, a Chinese company withdrew from the country’s flagship hydrocarbons project. In a statement, Iran’s oil minister said that CNPC had withdrawn from developing phase 11 of South Pars. South Pars is the world’s biggest gas field. The company pulled out because of US sanctions and concerns about its interests in the United States. This was another blow to Iran, which has suffered a lot after the US pulled out of the JCPOA.
The EUR/USD pair was unchanged during the Asian session. The pair is trading at 1.0985, which is higher than last week’s low of 1.0875. On the hourly chart, the pair is slightly lower than the upper line of the Bollinger Bands and slightly lower than the yellow diagonal resistance level. The RSI has remained slightly unchanged at 59. The pair will likely remain in this holding pattern ahead of crucial inflation numbers expected later this week.
The GBP/USD pair was unchanged as traders weighed on Brexit developments. The pair is now trading at 1.2326, which is higher than last week’s low of 1.2200. On the hourly chart, the pair is trading at the middle line of the Bollinger Bands. The accumulation/distribution indicator has been moving upwards while the momentum indicator has remained above 100. The pair will likely move lower as hopes of a deal before the October 31 deadline falters.
The XBR/USD pair declined slightly to a low of 58.74. On the hourly chart, this price is slightly above last week’s low of 56.90. On the hourly chart, the price is along the 50-day and 25-day moving averages. The RSI has declined from the overbought level of 70 to the current low of 47. At this stage, the pair will likely break out in either direction.