Greenback rises in reaction to positive US jobs data
Asian stocks were mixed as traders continued to focus on the coronavirus. The number of people infected with the disease continues to rise with official data stating more than 40,000 people have been infected. More than 900 people have died of the disease. SARS, a disease that began in southern China, killed more than 775 people. The concern is that the illness will affect the global supply chain. This is because most cities, including Beijing, have been in shut down for two weeks. Many companies have either shut operations or reduced their output. Transport in the country has also struggled as many international airlines have paused their trips to the country. Today, data from China showed that consumer prices increased in January. The headline CPI rose by 1.4% after rising by 0.4% in the previous month.
The dollar strengthened during the Asian session as traders continued to react to the mixed jobs numbers. On Friday, data from the Labour Department showed that the economy continued to add more jobs, boosted by mild weather. The economy added more than 225k jobs in January while the unemployment rate rose slightly to 3.6%. Jobs have been added for 112 straight months. The jobs report provided an early indication of the impact of rate cuts by the Fed. According to the Labour department, the economy added 514k fewer jobs in 2018. The jobs growth was stronger in 2019 when the Fed slashed rates three times.
Traders will focus on the earning season that will continue in Europe and in the United States. According to Factset, 64% of companies in the S&P have released their earnings. Most of these companies have released reports that have been relatively positive. Some of the companies that will report today are Allergan, Restaurant Brands, Loews Corporation, Edgewell Personal Care, Avaya, Callaway Golf, Chegg, BrightHouse Financial, and Summit Financial. The market will want to hear how these companies are doing to protect their workers in China.
The EUR/USD pair declined to an intraday low of 1.0940, which is the lowest level since October last year. The pair has been on a downward trend after reaching a high of 1.1095 on January 2 this year. The price is below the 28-day and 14-day EMAs. It is slightly above the 14-day triple exponential moving averages indicator. The RSI has emerged from the oversold level of 30 to the current 42. The pair will likely continue moving in a downward trend today.
The GBP/USD pair declined to a low of 1.2880. This was in reaction to the positive job numbers from the US. As the pair dropped, it moved slightly below the important support of 1.2958. The price is below the 14-day and 28-day EMA while the gap between the two is increasing. The RSI has moved slightly below the oversold level. The pair may continue moving lower today.
The AUD/USD pair rose during the Asian session. The pair rose from Friday’s low of 0.6660 to an intraday high of 0.6705. The 28-day and 7-day EMAs appear to be making a bullish crossover on the hourly chart. At the same time, the pair is trading along the upper line of the Bollinger Bands, which is a bullish sign. The RSI too has been rising. The pair may continue rising today.