Investors cheer as US unemployment rate falls to 49-year low
The euro gained against several other global currencies after the region’s inflation rose in April. In the month, the consumer prices rose by 1.7%, which was higher than the March gain of 1.4%. Investors were expecting the prices to rise by 1.76%. The core CPI, which excludes the volatile food and energy products rose by 1.2%, higher than the expected 1.0% gain. On the negative side, the PPI, which measures the change in price of goods sold by manufacturers rose by 2.9%, lower than the expected 3.0%. On a MoM basis, this number declined by -0.1%.
The sterling moved lower against the USD after the release of the UK services PMI data. The data showed that the PMI rose to 50.4, which was in line with expectations. In the previous month, the CPI had contracted to 48.9. This data came a day after the BOE delivered its interest rates decision. In the decision, the BOE left interest rates unchanged and announced that rates increases will move at a slower rate. The bank also raised the economic growth forecast.
In the United States, the Labor Department released jobs numbers that were mixed. In April, the economy added more than 263K jobs, which was much higher than the expected 181K. The unemployment rate dropped to 3.6%, which was the lowest level in decades. The U6 unemployment rate remained unchanged at 7.3% while the private nonfarm payrolls increased by 236K. On the negative side, the manufacturing payrolls increased by 4K, which was lower than the expected 10K. The average weekly hours dropped to 34.4 from the previous 34.5 while the average hourly earnings remained unchanged at 3.2%.
In the past week, the EUR/GBP pair has been on a downward trend. The pair moved from a high of 0.8680 and yesterday reached a low of 0.8565. Today, it moved higher after the impressive inflation data from the EU. It reached a high of 0.8586, which is along the 50-day moving averages. It is slightly higher than the 25-day moving averages. This price is slightly below the 23.6% Fibonacci Retracement line on the hourly chart. The pair will likely move higher to test this Fibonacci level of 0.8590.
The GBP/USD pair declined sharply after the release of UK services PMI data. The pair reached an intraday low of 1.2988. On the hourly chart, the price is slightly lower than the 25-day and 50-day moving averages and along the lower line of the Bollinger Bands. The RSI declined to below 30, while volumes are increasing. There is a likelihood that the pair will continue moving lower, to test the 1.2950 level.
The EUR/USD pair was struggling for direction after investors received the April jobs numbers. Initially, the pair dropped to a low of 1.1135 and then returned to the level it was before the jobs data. On the hourly chart, this price is along the lower line of the Bollinger Bands and along the 23.6% Fibonacci Retracement level. The Chaikin Oscillator moved above the neutral line. There is a likelihood that the pair will move slightly higher, to test the 38.2% Fibonacci Retracement level of 1.1190.