DOLLAR INDEX WEAKENS AS UNEMPLOYMENT RATE FALLS TO 48-YEAR LOW

The Italian bonds continued to rise today after the outline of the government’s spending was published. Traders believe that the priorities will increase spending and raise the deficit. The plan targets an annual budget deficit of 2.4% in 2019 and gradually reduce it to 2.1% and 1.8% in 2020 and 2019 respectively. These projections were higher than those announced earlier this week. This news is important because after the crisis in Greece, traders believe that Italy will likely be next. It is also important because unlike Greece, Italy is the fourth largest economy in the EU after Germany, UK, and France. The two-year treasuries rose by 20 basis points to reach a high of 1.4% while the five-year reached a high of 2.64%.

The Swiss Franc moved closer to parity with the United States dollar after Swiss inflation estimates missed estimates. The data from the Swiss bureau of statistics showed that the CPI rose by 1% in September. This was lower than the 1.1% traders were expecting and August’s 1.2%. The core CPI rose by 0.4% which was lower than the 0.6% traders were expecting. This data will reinforce the SNB’s decision to leave interest rates at these levels for the next few years.

The US Department of Labour released the jobs numbers for September that were mixed. The NFP dropped sharply to 134K. This was lower than the 185K traders were expecting and the 270 released in September. This number was sharply lower than the 230K released by ADP on Wednesday. The wage growth, average work weeks, and the participation met the expectations at 2.8%, 34.5% and 65.7% respectively. The wage growth was a slight decline from August’s 2.9%. On a positive side, the unemployment rate declined to a 48-year low of 3.7%.

Meanwhile, Canada too released employment numbers that were upbeat. In September, the economy added 63K people to the workforce. This was higher than the 25K that traders were expecting. The participation rate rose 65.4%, which was higher than the 65.3% that traders were expecting while the unemployment rate fell to 5.9% from the previous 6.0%.

USD/CHF

The USD/CHF pair rose to an intraday high of 0.9945 as it moved closer to parity. This was after data from Switzerland showed that inflation was easing. Technical indicators like the Average Directional Index (ADX), moving averages, and Bollinger Bands show that the upward trend will continue. However, traders should be cautious about going long if the pair reaches parity. This is because it will likely find resistance as traders think about their next moves.

EUR/USD

The EUR/USD pair was little moved after the latest jobs numbers from the Labour Department. It is now trading at the 1.1500 level as traders wait for direction. The current price is at the middle band of the Bollinger Bands. The momentum indicator is currently below 100 while the Money Flow Index is currently at 52. With this indecision in the market, traders should take time before entering trades.

USD/CAD

There was indecision in the USD/CAD pair after the US and Canadian jobs numbers. Initially, the pair slid to an intraday low of 1.2888 and then jumped to a high of 1.2955. As of this writing, these gains have been erased and the pair is trading at the 1.2920 level which is in line with the 23.6% Fibonacci Retracement level. At this level, there is a likelihood that the pair will move lower, mostly because of the positive Canadian jobs numbers.