US dollar rises as the American unemployment rate falls to 8.4%
The US dollar gained against its peers as traders reacted to the impressive nonfarm payroll numbers. According to the Bureau of Labour Statistics, the economy added more than 1.3 million jobs in August. Analysts polled by Reuters were expecting the economy to add 1.4 million people. The unemployment rate dropped to 8.4% while the participation rate increased to 61.7%. Meanwhile, the U6 unemployment rate, which includes people working part time, declined to 14.2% in August. These numbers were better than those released by ADP Research Institute on Wednesday. The company’s data showed that the private sector added more than 942k jobs.
The Canadian dollar rose against the US dollar as the market reacted to the higher crude oil prices and the better-than-expected jobs data from Canada. According to Statistics Canada, the country added more than 245k jobs in August. This brings the total number of jobs created in the past four months to almost 2 million. In April and March, the country lost more than 2.9 million jobs. The data also showed that the unemployment rate dropped to 10.2% while the participation rate increased to 64.6%. Meanwhile, crude oil price bounced back by more than 0.80%, helping support the Canadian dollar.
European stocks and American futures turned cautiously higher today. In the United States, futures tied to the Dow Jones and S&P 500 rose by 0.50% and 0.30%. In Europe, the DAX index, FTSE 100, and CAC 40 rose by 0.08%, 0.65%, and 0.85%, respectively. The sudden reversal came in a day after American stocks dropped by more than 3% as investors started to worry about the state of the economy and company valuations. They are also worried because talks between the White House and Democrats about stimulus have not yielded any results.
The EUR/GBP pair wavered today as traders reacted to the mild construction PMI data from the UK. It is trading at 0.8920, which is slightly below yesterday’s high of 0.8933. On the four-hour chart, the price is between the 50-day and 100-day exponential moving averages. It is also on the upper side of the descending channel that is shown in white. Therefore, there are two scenarios in this case. First, the pair could break out above this resistance level, making it a victory for the bulls. On the other hand, it may reverse as bears attempt to move to the lower side of the channel.
The DAX index declined sharply today and then pared back those gains in the afternoon session. The index is trading at €13,060, which is higher than the day’s low of €12,910. On the daily chart, this price is along the middle line of the Bollinger Bands. It is also above the ascending trend line that connects the lowest levels on May 22, July 3, and August 31. Therefore, the price is likely to continue rising as bulls aim for the next resistance level at €13,200.
The EUR/USD pair declined to an intraday low of 1.1810 after the US nonfarm payroll numbers. This price is along the lower line of the ascending channel that is shown in yellow. It is also along the 50-day and 100-day exponential moving averages while the signal line of the MACD has moved below the neutral level. Therefore, with the pair showing a bearish consolidation along the lower side of the channel, there is a possibility that it will break out lower.