US dollar calms ahead of nonfarm payrolls data
The sterling declined after the House of Commons voted overwhelmingly in favour of the EU withdrawal agreement that was negotiated by Boris Johnson. The bill will now move to the House of Lords. It now means that the UK will be the first country to leave the European Union. It will formally leave on January 31 and enter a transition period. During this transition, the UK will need to negotiate a trade deal with the EU. In a statement yesterday, the EU commission’s president said that it will almost be impossible for the two sides to reach a deal within 11 months.
The US dollar was relatively unchanged as the market waited for employment data from the United States. The Bureau of Labor Statistics (BLS) is expected to show that the economy created more than 164k jobs in December. This will be lower than the 266k jobs that were created in November. On Wednesday, data from ADP showed that the economy added more than 200k jobs in December. Meanwhile, the participation rate is expected to remain unchanged at 63.2%. The unemployment change to is expected to remain unchanged at 3.5%. Average hourly earnings are expected to have remained unchanged at 3.1%.
The price of crude oil declined slightly in overnight trading. This happened as Western officials started to believe that Iran was responsible for downing a Ukraine flight from Tehran. Iran has denied the allegation but evidence shows that they used a Russian-made missile. The plane was brought down at a time when the country was responding to America’s killing of an Iranian general. It is unclear how the United States and other Western countries will respond to the new details.
The EUR/USD pair was relatively unchanged in overnight trading. This is because there is indecision in the market ahead of the first NFP data of the year. The pair has declined from the December high of 1.1240 to a low of 1.1090. The price is along the 14-day and 28-day moving averages while the RSI has remained at a neutral level. The pair may see some more volatility ahead and after the official US jobs numbers.
The XBR/USD pair declined to a low of 64.22 as the markets received new developments from Iran. This was significantly lower than the weekly high of 70.65. The price is between the lower and middle line of Bollinger Bands while the RSI has moved from a high of 78 to a low of 34. The Average True Range has continued to soar. The pair will likely see some volatility as the market continues to observe the developments in the Middle East.
The GBP/USD pair declined to a low of 1.3012 after the UK parliament voted to leave Europe. The pair then rose to the current high of 1.3072. The price is slightly above the 38.2% Fibonacci Retracement level. The price is slightly above the 14-day and 28-day moving averages. Still, the pair is in a downtrend as shown in the hourly chart below. As with the EUR/USD pair, the pair may continue to see some volatility before and after the NFP data.