US dollar index falls sharply after mixed jobs numbers

It was a sea of red in the global stocks markets as traders continued to worry about global growth. This happened after a sudden and unexpected decline in Chinese exports, imports and trade surplus in February. Traders also worried about a trade deal that is being worked on between United States and China. While the Chinese have not given up on most of the US demands, there are worries that the country is having trade jitters. The worry is that Trump could introduce fresh last-minute changes in the wording of the deal when Xi visits Washington to sign it. China is also worried on the enforcement mechanism for the deal. US has insisted on having a right to introduce tariffs if China violates the agreement, without retaliation from Beijing. In China, this has been viewed as being an infringement to China’s sovereignty.

The Japanese yen rose against the USD after a positive report on its economy. The final reading of the country’s Q4 GDP numbers showed that the economy rose by an annualized rate of 1.9%. This is a slightly higher growth rate than the 1.8% that traders were expecting. The main reason for the growth was the rise in private consumption, which increased by an annualized rate of 2%. Investors believe that this will in turn lead to a higher rate of inflation, which remains below the BOJ’s target of 2%.

The USD index eased slightly after the release of mixed economic numbers. In February, the economy added 20K, which was much lower than the 181K that traders were expecting. It was also lower by far than the 300K jobs created in January. The private non-farm payrolls increased by 25K, lower than the expected 175K while manufacturing payrolls increased by 4K. Another negative reading from the data was the reduction in average hours worked to 34.4 from the previous 34.5. On the positive side, wages increased by 3.4%, up from the previous 3.3% while the unemployment rate declined to 3.8%. The participation rate remained unchanged at 63.5%.

EUR\USD

The EUR\USD pair moved slightly higher following yesterday’s sharp decline. The upward momentum continued after the release of US jobs numbers. The pair reached an intraday high of 1.1240, which was a few pips higher than yesterday’s low of 1.1146.  It is also along the 23.6% Fibonacci Retracement level. On the hourly chart, the 21-day and 14-day moving averages have crossed over, an indication that the upward trend could continue. This is also evidenced by the RSI, which has continued to move up sharply. If it does, it will likely test the 38.2% Fibonacci level of 1.1270.

USD\JPY

The USD\JPY pair dropped sharply after the mixed US jobs numbers. The pair reached an intraday low of 100.77, which is the highest level since last month. It was also along the 23.6% Fibonacci Retracement level. On the hourly chart, the pair is below the main moving averages and along the lower line of the Bollinger Bands. The pair could continue the downward trend, also a short-term pullback is also possible.

USD\CAD

The USD\CAD pair declined after the weak US employment numbers and the strong employment numbers from Canada, where the economy added 55.9K jobs. The pair reached a low of 1.3390. The Bear’s Power indicator has declined sharply while the price remains at the lower cloud of the Ichimonku Kinko Hyo. There is a likelihood that the pair will continue to move lower to the 61.8% Fibonacci Retracement level of 1.1330.