USD little moved as wage growth slows
The euro moved up slightly after better-than-expected economic numbers from Europe. In Germany, in February, the industrial production data rose by 0.7%, which was higher than the expected 0.6%. In January, the production had declined by -0.8%. In France, exports increased to $42.9 billion while imports increased to $46.9 billion. This happened as European leaders met in Brussels for their ordinary meetings. In the meeting, Theresa May is expected to ask for another extension to Article 50 as her party negotiates with the opposition.
The Japanese yen was little moved against key currencies after the release of household spending data. The data showed that in February, household spending increased at an annualized rate of 1.7%, which was slightly lower than the expected 1.9%. While the Japanese economy is going through a tight labor market, the impacts have not been realized in terms of consumer spending and inflation. This is partly because of the cultural approach of the job market in the country, where people tend to remain in a company for many years. The aging population is also not as dynamic about spending as the younger people of countries like United States.
The price of crude oil eased a bit after expectations of a trade deal were lowered. Yesterday, Donald Trump said that there is a likelihood that a deal will be reached in the next four weeks. Traders expected the ongoing negotiation session in Washington to conclude with final wording of the deal. In addition, traders are waiting for the upcoming OPEC meeting in Vienna, where they will assess whether to increase or lower production.
In the United States, the Labor Department released the official employment numbers that were mixed. In March, the economy added 196K jobs, which was higher than the 20K created in February. It was also higher than the 120K number released by ADP on Wednesday. The unemployment rate remained at 3.8% while the private nonfarm payrolls increased by 182K. On the other hand, the participation rate dropped slightly to 63% from last month’s 63.2% while average hourly earnings dropped to 3.2% from last month’s 3.4%. Perhaps, the strong labor market will help calm the markets at the time when other economic numbers have disappointed. Meanwhile, in Canada, the unemployment remained unchanged at 5.8% while the employment change declined to 7.2K, which was better than the expected decline of more than 10k.
The XBRUSD pair eased to an intraday low of 68.90, which was lower than the YTD high of 69.90. On the hourly chart, the pair is trading below the 21-day and 42-day moving averages. This is also between the 61.8% and 100% Fibonacci Retracement levels. The RSI has dropped from a high of 62 to the current 40. There is a likelihood that the pair will move slightly lower ahead of the OPEC meetings. If it does, it will test the important support of 67.5 before resuming the upward trend.
The EUR\JPY pair has been on an upward trend since March 28 when it traded at 123.63. Today, the pair reached a high of 125.50, which is between the 50% and 61.8% Fibonacci Retracement level. It is also between the upper and middle line of the Bollinger Bands while the momentum indicator is moving towards the important line of 100. The pair will likely consolidate as traders wait for the statement from the Eurogroup meetings.
The EUR\USD pair jumped to a high of 1.1247 shortly after the jobs numbers were released. The price then stabilized along today’s open of 1.1227. On the 30-minute chart below, the price is along the middle line of the Bollinger Bands while the money flow index remained unmoved. The price is also above the 38.2% Fibonacci Retracement level. The pair will likely pause slightly as investors digest the jobs numbers.