US dollar still under pressure after disappointing jobs data
The Australian dollar rose in the morning session as traders reacted to the mixed economic data from Australia. The data showed that headline retail sales rose by 1.3% in March, a slight decline from the previous 1.4%. This performance was better than the median estimate of 1.4%. Overall, sales declined by 0.5% in the first quarter after rising by 2.5% in the previous quarter. Analysts were expecting for the sales to fall by 0.4%. The currency possibly rose because of rising commodity prices and the overall weaker US dollar. The Bloomberg Commodity Index rose by 0.37% as investors priced-in strong recovery of the global economy. Indeed, Australia’s ASX rose to an all-time high helped by BHP and Rio Tinto.
The US dollar index declined slightly as traders continued to reflect on weak employment numbers published on Friday. The data revealed that the economy added less than 300,000 jobs in April, lower than the expected increase of more than 900,000. The data was even lower than the estimate of 700k by ADP that came out on Wednesday. The unemployment rate also surprisingly rose in April. Looking ahead, the dollar will be in the spotlight this week since the US will publish the latest inflation and retail sales data. If the numbers disappoint, it could validate the Fed’s views of an uneven recovery and the need for more stimulus.
The economic calendar will be relatively muted today. In Norway, the statistics agency will publish the latest consumer and producer inflation numbers. Economists expect a modest increase of inflation during the month. Still, the data will not have a major impact on the Norwegian krone since the country’s central bank has already said that it will hike rates later this year. In the United Kingdom, Halifax will publish the latest house price index. Meanwhile, traders will continue watching the cryptocurrency market. During the weekend, the price of Dogecoin crashed after Elon Musk hosted Saturday Night Live. Dogecoin, the fifth most valuable cryptocurrency, retreated from an all-time high after billionaire Elon jokingly called it "a hustle."
The AUD/USD pair rose to a high of 0.7862 in the morning session. On the four-hour chart, the price moved slightly above the 38.2% Fibonacci retracement level. It also moved above the important resistance level at 0.7817 and the 25-day and 15-day exponential moving averages (EMA). The Relative Strength Index (RSI) has also moved above the overbought level of 70. Therefore, the pair is likely to continue rising as bulls target the next key resistance at 0.0.7900.
The EUR/USD pair rose sharply on Friday after weak US employment numbers. On the four-hour chart, the pair managed to move above the important resistance at 1.2150, which was the highest level on April 30. The pair is also slightly above the 25-day moving average and the Ichimoku cloud. It is also approaching the year-to-date high of 1.2245 while the Relative Strength Index (RSI) kept rising. Therefore, the pair may keep rising as bulls target the highest point this year.
The USD/JPY pair is bouncing back after it declined sharply on Friday. It is trading at 108.85, which is higher than Friday’s low of 108.32. On the hourly chart, it moved below the lower side of the ascending channel and the neckline of the head and shoulders pattern. The signal line and histogram of the MACD has also formed a crossover pattern while the Relative Strength Index (RSI) has kept rising. Therefore, the pair may keep rising as bulls target the lower side of the channel.