US DOLLAR FALLS AFTER WEAK JOBS NUMBERS
The dollar fell today after the Labour Department released disappointing jobs numbers for the month of July. In the month, the economy added 157K non-farm payrolls, which was lower than the expected 193K. In June, the economy had added 248K jobs. Today’s data showed that the economy added 170K private Non-Farm payrolls, which was lower than the data released on Wednesday by ADP. On a positive note, the unemployment rate declined to 3.9% and manufacturing jobs increased by 37K. This was the fastest growth since September last year. Average week hours fell to 34.5 from June’s 34.6 while average wage growth rose by 0.3%.
Yesterday, the pound jumped immediately the BOE announced that it would hike interest rates. The surge was short-lived as the currency ended the day near the two-week low. Today, the GBP/USD pair continued to decline after services data disappointed. Data from HIS Markit showed that activity in the services industry rose to 53.5, which was lower than June’s 55.1 and the expected 54.7. This data showed that the activity rose at the slowest rate since April while job creation in the service industry was the slowest since 2016. This data came a day after Markit released similar data on manufacturing. The data showed that activity in the manufacturing industry grew at the slowest pace in three months while the positive sentiment declined to a 21-month low.
The Australian dollar jumped after the country reported better-than-expected retail sales data. In June. The retail sales grew by 0.4%, which was equal to the growth in May. This number was better than the expected 0.3% growth. In the second quarter, the retail sales numbers grew by 1.2%, which was better than the expected 0.8%. Traders were expecting a 0.8% growth. Strong retail sales in a country is a positive indicator of the economic growth because people tend to shop more when they have confidence in the economy. Starting on Wednesday, the Aussie has been falling – partly because of the strong US dollar – and as traders wait for the Reserve Bank of Australia, which is expected to release its interest rates decision on Tuesday.
The EUR/USD pair started a sharp decline on Tuesday when it reached a high of 1.1745. Since then, the pair has been declining, reaching a low of 1.1560. The upward movements started after the jobs numbers came in, taking the pair to the current 1.1610. This price is at the 21.6% Fibonacci Retracement level. It is also at the higher band of the Bollinger Bands. Further movements above this consolidation level will see the pair test the next resistance level of 1.1630, which is the 38.2% Fibonacci Retracement level.
The GBP/USD pair continued the downward movements started yesterday and reached an intraday low of 1.2975. After the US jobs numbers, the pair moved up and is currently trading at 1.3043. On the 30-minute chart, the RSI is currently at 62, which is the highest level since Wednesday. There is a likelihood that the current bump is a false breakout, which means that the pair could continue the downward momentum. To confirm whether it is a false breakout, traders should look at the 1.3080 level, which forms an important resistance.
The AUD/USD pair fell during the Asia hours and reached an intraday low of 0.7347. It then jumped in the afternoon hours to reach an intraday high of 0.7406, a level where the pair is finding some resistance as the bulls retreat. The current price is above the 100 and 50-day moving averages. The pair is likely to resume the downward movements and possibly test the 0.7370 level.