USD rises after unemployment rate rises
Global markets were mixed today after weak data from China. Manufacturing data from Caixin confirmed that the manufacturing sector was indeed contracting. The PMI for January was at 48.3, which was lower than the expected 49.5 and the previous month’s 49.7. This number came a day after another one from China Logistics Information Center which showed that activity was at 49.5. As the second largest economy in the world, its health is often viewed as a barometer of how good the global economy is doing.
The euro moved higher against the USD despite the weaker-than-expected data from the region. In Germany, the manufacturing PMI declined to 49.7, which was lower than the expected 49.9. This was the lowest level since January 2016. The same was true for Italy, a country that is now in recession. The PMI dropped to 47.8 in January, which was the fastest deterioration since May 2013. In the UK, the PMI dipped to 52.8 from the previous month’s 54.2. In the country, companies increased their stockpiling to the highest level in 27 years. A positive reading came from Spain, where the PMI increased to 52.4, from the previous month’s 51.1. Further, inflation from the EU eased in January as energy prices declined. The CPI rose by 1.4%, which was lower than the expected 1.6%.
In the United States, the Labor Department released jobs numbers that were better than expected. The total non-farm payrolls for January rose to 304K, which was higher than the expected 165K. This was the second consecutive data that passed the 300 mark. The private non-farm payrolls rose by 296K, which was better than the expected 170K. The wage growth and the average week hours remained unchanged at 3.2% and 34.2 respectively. On a negative side, the unemployment rate increased to 4.0% while the U6 number rose by 8.1%. The U6 number factors in the people who are working part-time.
The price of palladium remained closer to its multi-year highs of $1335. The XPD/USD pair is currently trading at 1320, which is higher than the short, medium and longer-term moving averages as shown on the daily chart below. On the daily chart, the pair’s RSI remains below the overbought level of 70 while the momentum indicator remains above the 100 level. While the pair could continue the upward trend, there is a possibility that a short-term correction could happen.
The price of Brent crude oil is currently trading at the $60.88. On the daily chart, the pair has met some resistance at these levels, which are also between the 23.6% and 38.2% Fibonacci Retracement level. As a result of this consolidation, the current price is along the short and medium-term moving averages. Also, the pair’s RSI has been relatively unchanged. In the next few days, the pair could move in either direction, with the key levels to watch being 50.55 and 64.50.
The EUR/USD pair rose today even after the better-than-expected jobs numbers. It reached an intraday high of 1.1475, which is higher than yesterday’s low of 1.1433. On the hourly chart, the pair is slightly above the 20-day and 50-day EMAs while the RSI continued to rise to almost the important 70 level. There is a likelihood that the pair will continue moving up, especially because of the Fed decision on Wednesday.