US dollar jumps as the unemployment rate drops to 3.5%
The USD jumped after the Bureau of Labour Statistics (BLS) released jobs numbers for the month of November. The numbers showed that the economy added more than 266k jobs in November, which was higher than the consensus estimates of 186k. The unemployment rate dropped to 3.5% from last month’s 3.6%. The U6 unemployment rate dropped to 6.9%. Manufacturing payrolls rose by 54k, which was better than the expected 38k. The average hourly earnings rose by an annualized rate of 3.1%, which was higher than the expected 3.0%. Meanwhile, in Canada, the statistics office released weak employment data. The economy’s unemployment rate rose by 5.9% after rising by 5.5% in the previous month. Participation rate dropped from 65.7% to 65.6% while the employment change dropped by 71.2k.
The euro declined today after data from Europe dashed hopes that the region was recovering. Data from Germany showed that the industrial sector suffered the worst decline in a decade. Industrial output in December dropped by 5.3% from the same month in 2018. The manufacturing production declined by 1.7% on a MoM basis. This was lower than the consensus estimates of a -0.6% drop. The drop was concentrated in the production of capital goods like tools and vehicles. This data came a week after last week’s data showed that industrial orders declined sharply in October.
Oil price struggled to find direction as OPEC+ leaders struggled to reach a deal on supply cuts. OPEC members agreed to slash oil by 500k barrels a day in the meeting yesterday. Today, the leaders were in a meeting with non-OPEC members like Russia to ratify the deal. The 500k barrels a day is larger than what the market was expecting. This deal means that OPEC+ members will be slashing production by more than 1.7 million barrels a day until March. At the same time, the market is concerned that the amount will not go far enough to end the current glut. Non-OPEC member countries like the United States and Norway are expected to ramp up production in the coming year.
The XBR/USD pair struggled to find direction today as the markets waited for more information from Vienna. The pair is now trading at 62.87, which is slightly below yesterday’s high of 63.52. The price is along the 14-day moving averages and slightly above the 28-day moving averages. The pair appears to be forming a head and shoulders pattern on the hourly chart. This may be an indication that the pair will likely continue moving lower.
The EUR/GBP pair remained at the lowest level since May 2017 as data from Germany disappointed. At the same time, house price index data from the UK were better than what was expected. The pair is trading at 0.8445, which is slightly above the important support of 0.8300 on the weekly chart. The price is also above the 38.2% Fibonacci Retracement level and slightly above the 14-day and 28-day moving averages. The pair may continue to drop but this could change next week as the UK goes to the polls.
The EUR/USD pair dropped today after the better-than-expected jobs numbers. The pair dropped to 1.1068 from the day’s high of 1.1095. The price is along the lower line of the Bollinger Bands while the RSI has dropped to the oversold level of 30. The 14-day and 28-day moving averages indicators have made a bearish crossover. The pair may continue to move lower after the positive jobs data.