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Mixed Payrolls Data Results In Greenback Weakness

FOREX
  • Markets were characterised by some two-way action following the mixed US payrolls report. The initial reaction was to sell dollars on a weaker than expected headline figure of 199k vs. an estimate of 450k. Given some moderately positive revisions and a lower unemployment rate, the greenback quickly pared losses, trading within close proximity of pre-data levels.
  • As the dust settled, the underwhelming headline figures and potential short-term positioning dynamics prompted the USD to grind lower throughout the course of Friday’s trading session. The dollar index has weakened by 0.6% and sits at the low of the day approaching the close.
  • The largest beneficiaries from the dollar’s decline were the Euro and the Canadian dollar, the latter aided by some much stronger employment data with particular advances in the full-time component.
  • USDCAD has had the biggest move on Friday (-0.75%) and the pair is re-approaching last week’s low of 1.2621 - a key short-term support. A move below these levels would cancel any possible reversal pattern and initially open 1.2608 and 1.2585, low Nov 19.
  • EURUSD, once again, struggled below the 1.1300 mark and the greenback retreat eventually led to a break of Wednesday’s highs through 1.1346. The current consolidation means resistance at 1.1383/86, Nov 30 and Dec 31 high, is intact and that the pair remains inside December’s range. For technical bulls, clearance of these levels would suggest scope for a stronger short-term recovery.
  • AUD, NZD and GBP all rallied between 0.3-0.4%, while the Japanese Yen edged higher but remained in a tighter 30 pip range following the data.
  • Monday’s data docket is extremely light before the Wednesday’s main event – the release of US December CPI.
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