USD rises despite historical-low nonfarm payrolls
The euro rose slightly even as we received negative economic data from the eurozone. Data released by the German Bureau of Statistics showed that exports and imports contracted at the fastest rate since the last financial crisis. Exports declined by 11.8% in March after rising by 1.2% in February while imports dropped by 5.1%. As a result, the trade surplus narrowed from the previous 21.4 billion euros to 12.8 billion euros. In Spain, industrial production dropped by 12.2% in March. Also, the market was watching the developments between the ECB and a German court. In a statement, Christine Lagarde said that the bank was under the authority of the European parliament.
The Japanese yen was little changed today as the market reacted to the disappointing data from the Bureau of Statistics. The data showed that overtime pay dropped by a record of 4.1% in April, which was the lowest level since the last financial crisis. The number is usually an important guide on the strength of Japanese companies. In the same month, household spending dropped by 6% in March after falling by 0.3% in the previous month. Wages also rose by just 0.1% in March from the previous 0.7%. These numbers provide a picture of an economy that is going through a historic recession.
The US dollar index rose after the Bureau of Labour Statistics released the worst nonfarm payrolls data in US history. The numbers showed that the nonfarm payrolls dropped by a record 20.5 million in April while the unemployment rate rose to a record 14.7%. The average work hours rose to 34.2 as more people worked and stayed at home. The U6 unemployment rate, which counts people working part time, rose to more than 22.8%. Still, analysts believe that the worst has already happened now that the number of new infections has fallen and some states are starting to reopen.
The EUR/JPY pair was little changed today as the market reflected on the news from Europe and Japan. The pair is trading at 115.25, which is slightly below yesterday’s close of 115.45. The price is also along the 23.6% Fibonacci retracement level. Still, the pair appears to be in a strong upward trend, which means that bulls may push it to the 38.2% level of 115.71. To get to this level, the bulls will need to move above yesterday’s close of 115.45.
The GBP/CHF pair declined slightly to a low of 1.2020, which is slightly below the 50-day and 25-day exponential moving averages. The price is slightly below the 50% retracement level while the RSI has remained at the neutral level of 45. The pair is also forming a descending triangle pattern. This means that the downward trend may continue as the bears attempt to test the 61.8% retracement at 1.1995.
The EUR/USD pair struggled to find direction after the weak employment data from the US. The pair is trading at 1.0828, which is slightly below the day’s high of 1.0853. It also seems like it has formed a double top pattern at this level. Also, it has moved below the 25-day and 14-day EMA. Therefore, the pair may continue falling to test the 23.6% support at 1.0795.