US dollar firms after impressive jobs numbers

Global stocks declined today as more signs of global weakness emerged. Yesterday, in an unprecedented move, Apple announced that its final quarter earnings will be sharply lower than the previous guidance. The company blamed this decline on the weakness of iPhone sales in China, its third biggest market. Before today’s market open, the company’s stock declined by more than 8%. Since October, its market value has lost more than $300 billion worth of value.

After falling sharply yesterday, the GBP/USD pair recovered today even after weaker than expected construction PMI data. The numbers showed that the PMI in December was at 52.8, which was lower than November’s 53.4 and the consensus estimates of 52.9. The decline came as confusion in the market over Brexit intensified as the March 29 deadline nears. To date, there is no clear path to how the UK will separate from the European Union.

The US dollar rose after better-than-expected non-farm employment change from the United States. Data from ADP showed that the total number of people employed in the month were 271K. This was much higher than the consensus estimates of 179K and the previous month’s 157K. This number came a day before the government releases the official numbers. Meanwhile, the initial jobless claims in the country increased by 231K while the continuing jobless claims increased by 1,740K in the past week.

EUR/USD

After rising initially, the EUR/USD gave up gains after the impressive employment numbers from ADP. The pair reached an intraday high of 1.1383 and then declined to a low of 1.1340. On the hourly chart, the pair’s price is below the 50-day and 25-day exponential moving average. The price is also between the 23.6% and 38.2% Fibonacci Retracement levels. In the short term, the pair could continue moving downwards to test the 23.6% Fibonacci level of 1.1320.

GBP/USD

Yesterday, the GBP/USD pair declined sharply to an intraday low of 1.2425. Today, it recovered and reached a high of 1.2585. The current price of 1.2575 is along the important Fibonacci retracement level of 38.2%. The price is also along the upper band of the Bollinger Bands and also below the 50-day EMA. There is a possibility that the pair will move up, to test the 50% Fibonacci Retracement level of 1.2620, which is also along the 50-day EMA level.

XAU/USD

The XAU/USD pair continued the upward trend and reached an intraday high of 1292. This was the highest level in 6 months. The pair has continued to move up as market volatility has increased. Indeed, the VIX index that measures the fear in the market has risen by almost 30% in the past month. The current level is higher than the 50-day and 100-day EMA while the RSI has moved strongly into the overbought territory. The pair will likely continue moving up until it reaches the important resistance level of 1300.