DOLLAR INDEX RISES AFTER US WAGES RISE SHARPLY
World markets gained today as investors hoped that the ongoing trade conflict between the US and China will ease. Yesterday, Trump sent a tweet saying that he had a lengthy conversation with China’s Xi Jinping and planned for a meeting at Argentina. Earlier today, it was reported that Trump had asked his officials to draft a possible trade deal with China. According to Bloomberg, the most pressing issue in the new deal will be about intellectual property theft by China. If such a deal is made, it will end a difficult year for investors and the entire market in general.
Sterling continued the upward trend started early this week. This is as traders placed their hopes on a Brexit deal to be made later this month. However, there are concerns that conservatives will reject the new deal when it is tabled in parliament. It was also accelerated by the better-than-expected construction PMI number. The data from ONS said that the PMI rose to 53.2 which was higher than the 52.0 that traders were expecting. It was also better than September’s PMI which was at 50.
The euro rose today even after a mixed data released today. The German manufacturing PMI for October was at 52.2. This was lower than the consensus estimate of 52.3. In the EU area, the PMI of 52.0 missed the estimate of 52.1. These numbers are a reflection of the EU economy that is struggling. In fact, the first reading of the third quarter’s GDP rose by a smaller rate than traders had expected.
The US Labor department released the employment numbers for the month of October. The numbers showed that the economy added 250K jobs. This was higher than the 190K that traders had expected and the 134K in September. The unemployment rate remained at 3.7% while the average hourly earnings rose by 3.1%. This was the highest level since 2009. This was higher than September’s gain of 2.1%. In addition, the closely-watched manufacturing numbers rose by 32K in October. This was almost double the consensus estimates. These numbers are good for the Trump administration as citizens prepare to go to vote on Tuesday.
Canada also released jobs numbers for the month of October. The numbers were mixed with the unemployment rate falling to 5.8%. This was better than the previous 5.9%. On the other hand, the employment change for October was 11.2K, which was worse than the expected 12.7K. The participation rate was at 65.2% which was lower than the previous 65.4%.
The EUR/USD pair rose to an intraday high of 1.1456. These gains were eased slightly after the impressive jobs numbers. After they were released, the pair fell to 1.1410. Today’s high was along the 38.2% Fibonacci Retracement level. The ADX eased a bit, a reflection that a new downward trend could start. However, the double EMA indicator shows that the pair will likely continue the upward trend. If it does this, it will likely move to test the 50% Fibonacci Retracement level of 1.1470.
The GBP/USD pair continued the upward momentum today and reached an intraday high of 1.3043. This was the highest level since October 23. The RSI rose to 64 while the double EMA showed that the pair could continue the upward trend. While the pair is likely to see a short-term reversal, there is a likelihood that the pair will continue moving up as traders wait for the news on Brexit.
The USD rose today against the Canadian dollar after the two countries released employment numbers for October. The US numbers were better while the Canadian numbers were mixed. The pair reached a high of 1.3110. This level was along the upper line of the Bollinger Bands. As the pair rose, it halted a decline that started on Wednesday this week. The Bulls Power indicator also rose after data was released as more bulls moved to buy. The pair might continue to move higher to the 1.3150 level.