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FOREX: US Dollar Ending Higher Following Mixed US Employment Report

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  • The greenback initially traded weaker as markets reacted to the higher-than-expected US unemployment rate, bolstering the case for the Federal Reserve cutting rates at its December meeting. However, while ignoring the lower front-end US yields, currency markets reversed course, and the USD index looks set to close the session with 0.35% gains.
  • The short-term EURUSD bounce reached a three-week high of 1.0630 before substantially reversing course. Price action represents the fourth attempt above 1.0600, the prior breakdown point for the pair, and we are yet to have a daily close above this level, potentially bolstering the medium-term trend direction, which remains down.
  • Markets will also be eyeing a false break of the 20-day EMA, having slipped back below the average in recent trade. Key levels on the downside are well established at 1.0461, the Dec 2 low and 1.0335, the Nov 22 low and the bear trigger.
  • Antipodean FX is notably underperforming on the session with both AUD and NZD down comfortably over 1%. There was an element of concern that the appointment of David Perdue by Trump as the Ambassador to China is a strong signal of hawkish intent toward China under the Trump admin next year - which is certainly negative for both AUD and NZD. Resilience for both EURAUD and EURNZD over the French political developments may also be enhancing this dynamic.
  • In Canada, a poor breakdown of full-time versus part time jobs created and a higher than expected unemployment rate has boosted USDCAD, as market participants see a second 50bp BOC cut firmly in their sights. The pair resides around 1.4150 ahead of the weekend close, near to cycle highs.
  • Chinese inflation data crosses Monday before Wednesday’s release of US CPI. Several central banks have rate decisions, including the RBA, BOC, SNB and ECB.
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  • The greenback initially traded weaker as markets reacted to the higher-than-expected US unemployment rate, bolstering the case for the Federal Reserve cutting rates at its December meeting. However, while ignoring the lower front-end US yields, currency markets reversed course, and the USD index looks set to close the session with 0.35% gains.
  • The short-term EURUSD bounce reached a three-week high of 1.0630 before substantially reversing course. Price action represents the fourth attempt above 1.0600, the prior breakdown point for the pair, and we are yet to have a daily close above this level, potentially bolstering the medium-term trend direction, which remains down.
  • Markets will also be eyeing a false break of the 20-day EMA, having slipped back below the average in recent trade. Key levels on the downside are well established at 1.0461, the Dec 2 low and 1.0335, the Nov 22 low and the bear trigger.
  • Antipodean FX is notably underperforming on the session with both AUD and NZD down comfortably over 1%. There was an element of concern that the appointment of David Perdue by Trump as the Ambassador to China is a strong signal of hawkish intent toward China under the Trump admin next year - which is certainly negative for both AUD and NZD. Resilience for both EURAUD and EURNZD over the French political developments may also be enhancing this dynamic.
  • In Canada, a poor breakdown of full-time versus part time jobs created and a higher than expected unemployment rate has boosted USDCAD, as market participants see a second 50bp BOC cut firmly in their sights. The pair resides around 1.4150 ahead of the weekend close, near to cycle highs.
  • Chinese inflation data crosses Monday before Wednesday’s release of US CPI. Several central banks have rate decisions, including the RBA, BOC, SNB and ECB.