USD jumps after weak but better-than-expected jobs numbers

Global stocks began the month on a high note as investors reacted to a positive jobs report from China. In Europe, the DAX and CAC indices rose by 15 and 20 points respectively. In Asia, the Hang Seng and China A50 rose by 155 and 240 points respectively. Earlier in the day, data from Caixin showed that China’s manufacturing PMI increased to 51.7 in October. This was higher than the consensus estimates of 51.0. This data came after another survey released yesterday showed that the manufacturing sector was still contracting. Traders brushed-off a Bloomberg report that said Chinese officials had cast doubts on the prospects of a long-term trade deal. 

Traders today received manufacturing PMI data from a number of countries. In Australia, the manufacturing PMI declined from 50.3 to 50.0. In Japan, the Nikkei/Markit PMI data increased from 48.0 to 48.4. In Switzerland, the PMI jumped from 44.9 to 49.4, while in Sweden it dropped from 46.1 to 46.0. In the United Kingdom, the PMI increased from 48.3 to 49.6. These numbers come at a time when interest rates in developed countries are at historic lows. They also come at a time when investors and executives are optimistic that the US and China will seal a deal on trade.

The USD rose today after the United States released employment numbers for October. Nonfarm payrolls came in at 128k, which was better than the consensus estimates of 75k. It was lower than last month’s 180k. Private nonfarm payrolls came in at 131k, which was higher than the consensus estimates of 80k. The unemployment rate increased slightly from 3.5% to 3.6% while manufacturing payrolls declined by 36k. Meanwhile, average hourly earnings remained unchanged at 3.0%. Later today, ISM will release the manufacturing PMI data for October.

EUR/GBP

The EUR/GBP pair was relatively unchanged today after the release of PMI data from Europe. The pair is trading at 0.8600, which appears to be a major support level on the daily chart. The pair has been on a sharp decline since August 12, when it was trading at 0.9327. The pair is trading below the 14-day and 28-day moving averages while RSI is trading slightly above the oversold level of 30. Volatility, as measured by the Average True Range (ATR) has dropped. The pair may continue to move lower to test the important support of 0.8500.

AUD/NZD

AUD/NZD pair was relatively unchanged today after the PMI data from Australia. The pair is trading at 1.0732, which is slightly below the 14-day and 28-day moving averages on the hourly chart. This price is between the 38.2% and 50.0% Fibonacci Retracement level. The RSI has remained slightly above the oversold level of 30 while the signal line of MACD has started moving upwards. The pair may remain unchanged during the American session as markets wait for the RBA decision next week.

EUR/USD

EUR/USD pair declined sharply after the better-than-expected jobs numbers. The pair reached a low of 1.1125, which was the lowest level since yesterday morning. The price is along the lower line of the Bollinger Bands on the hourly chart. The RSI has moved lower from a daily high of 78 to 36. While the pair may continue to move lower, there is a likelihood of a bullish reversal during the American session.