The US dollar moved higher after the October jobs report came in stronger than expected. Nonfarm payrolls rose 165K versus the 65K estimate, September was revised up to 60K from 29K, and the net revision over the prior two months was +84K. The unemployment rate edged down to 4.1% from 4.2%, even as labor force participation ticked higher.
The wage numbers also got the market’s attention. Average hourly earnings rose 0.4% on the month and 3.1% from a year ago, both above expectations. There was some softness beneath the headline, with the U6 underemployment rate rising to 7.9% from 7.6% as more people worked part time for economic reasons. Still, the combination of stronger payrolls and firmer wages put a potential December Fed hike more in play. The US 2-year yield rose 4.5 basis points on the day to 4.52%, while USDJPY was up 72 pips at 158.38 in the initial report.
Can the dollar hold its gains?
In the video above, I go through EURUSD, USDJPY, GBPUSD, USDCHF, USDCAD and AUDUSD. For each pair, I identify the level that acts as a barometer for buyers and sellers, where traders can define close risk, and the next targets if the move continues.
The first move after payrolls can come quickly. What I want to see next is whether the price can stay beyond the levels it broke. For USDJPY, USDCHF and USDCAD, that means seeing whether buyers can hold above broken resistance. For EURUSD, GBPUSD and AUDUSD, it means seeing whether sellers can keep the price below broken support. If those breaks hold, traders have a level to lean against as they look toward the next target. If the price moves back through the breakout level, that’s the first clue the post-jobs move is losing momentum.
EURUSD: The EURUSD is below a swing area between 1.1152 to 1.1160. Stay below and the lows from October are targeted.
USDJPY: The USDJPY is moving back to the 200 day MA at 158.60. Like I have been saying for a while, get and stay above that MA is needed to give the buyers more control. Buyers have tried going back to September, but buyers turn to sellers. The price moved above the 200 and 100 hour MA at 157.93 and 158.104. That is a risk level now.
GBPUSD: The GBPUSD fell and ran from the 100 day MA and the 200 hour MA at 1.3392. Stay below keeps the sellers in control. The broken 38.2% at 1.3342 is the next target.
USDCHF: The USDCHF is trading higher and tests the 200 hour MA and broken 38.2% near 0.8224. Get above would be more bullish. Stay below and the price is between the 100 hour MA at 0.8172.
USDCAD: The USDCAD has the stronger US and the weaker Canada jobs to digest. That has the price moving higher and into the swing area between 1.4129 and 1.4153.
AUDUSD: The AUDUSD is testing the key swing area floor going back to January. That area comes between 0.6832 up to 0.6863.
This article was written by Greg Michalowski at investinglive.com.