On Friday the 6th of April, trading on the EURUSD pair closed up. Volatility on currency markets was high throughout the day. In Europe’s trading, ahead of the NFP report, the euro slid to 1.2215. After a release of mixed data, the single currency jumped to 1.2291 against the greenback, marking a rise of 76 pips.
103,000 new jobs were created outside the US agricultural sector in March against a forecast of 190,000. The value for January was revised from 239,000 to 176,000, and for February from 313,000 to 326,000. This gives us an aggregate revision of -50,000 new jobs. Unemployment held at 4.1%. Average hourly earnings rose by 0.3% following a 0.1% bump in February.
The US labour market data has mixed implications. On the one hand, fewer jobs were created than expected and January’s figure was revised significantly downwards. On the other hand, we saw an increase in average hourly earnings on the previous month. This is an important indicator for the Fed.
This data sank US10Y bond yields along with the dollar.
Day’s news (GMT+3):
- 08:45 Switzerland: unemployment rate (Mar).
- 09:00 Germany: trade balance (Feb).
- 10:30 UK: Halifax house prices (Mar).
- 11:30 Eurozone: Sentix investor confidence (Apr).
- 17:30 Canada: Bank of Canada business outlook survey.
Fig 1. EURUSD hourly chart. Source: TradingView
I didn’t make any forecasts on payrolls day given the unpredictability of the NFP report. The labour market report contains too many elements that have a strong influence on the dollar’s dynamics. This brings increased risks of making a loss when news items are released.
At the time of writing, the euro is trading at 1.2277. On the chart, I’ve shown my predicted trajectory for the euro up until Wednesday. Since markets closed up on Friday, we should, in theory, be looking for movements in the opposite direction today. The weekly pattern (window of 120 bars) and hourly cycles point towards continued growth.
The dollar is showing mixed dynamics against the majors in Asia. Most of the euro crosses are trading down while US10Y bond yields are up. We could see the rate retreat to the LB balance line at 1.2260, but I think that the drop will begin only after buyers have shifted the daily maximum from 1.2291 to 1.2311. This is even more likely given that the trend line was broken through on the back of the NFP report.