The Dollar is rising despite disappointing employment data and gold down to hit the 1265 level
The US Dollar recovered against it’ Rivals following upbeat Services and Factory Orders data. This reverse earlier loss which resulted from a weaker-than-expected October Jobs report. The Dollar Index (IUSD/DXY) finished near four-month highs. The Euro reversed, falling to its weekly low while the Dollar rose above the 114 level against the Yen.
Australian Retail Sales disappointed, falling to 0.0% in October. This surprised many analysts who had expected a rise of 0.4% following September’s -0.5%. AUD/USD tumbled to one-week lows at 0.7652 (0.7720 Friday).
China’s Caixin Services PMI rose to 51.2 against a forecast 50.8
UK Services PMI climbed to 55.6 from the previous 53.6
US October Payrolls increased to 261,000 against a median forecast rise of 313,000. September’s Payrolls were revised to show a gain of 18,000 against the previous fall of 33,000.
US October Unemployment Rate improved to 4.1% from 4.2%. Wage gains slipped to 0.0% from a forecast of 0.2% and previous 0.5%.
Canada’s Payrolls rose to 35,300 against a forecast gain of 15,300. Unemployment rose to 6.3% against a forecast of 6.2%
US ISM Non-Manufacturing PMI rose to 60.1 against a forecast of 58.5, it’s the highest level since 2005. US October Factory Orders rose 1.4% against a forecast rise of 1.3%
Wall Street stocks were mostly up with the Dow gaining 0.1%. The S&P 500 finished with a gain of 0.2%.
Global yields were mostly lower. The yield on the Ten Year US Treasury slipped 2 basis points to 2.33%. Germany’s Ten Year Bund yield finished at 0.36% from 0.37%. The yield on Japan’s Yen year JGB was unchanged at 0.04%
USD/DXY – closed up at 94.917 from 94.682 Friday
EUR/USD – slipped to 1.1610 (1.1662 Friday)
USD/JPY – little-changed to 114.10 from 114.05 Friday
GBP/USD – slightly up at 1.3075 (1.3065 Friday)
AUD/USD – falls to 0.7652 from 0.7722 Friday.
USD/SGD – higher to 1.3650 (1.3592 Friday).
Outlook: The Dollar gained broadly against its Rivals to finish on a strong note despite weaker-than-forecast payrolls data. The data should have no bearing on the Fed which is almost certain to raise rates next month. This auger well for further Greenback gains which will likely be led by a fall in the Euro. The Dollar also closed higher against the Emerging Market currencies.
Events and economic data are light today.
BOJ Governor Haruhiko Kuroda is scheduled to speak at a meeting with business leaders in Nagoya. (GMT 1 am, Nov 6/Local Time 12 pm, Nov 6)
Eurogroup Meetings (all day, no specific time given) – usually held in Brussels, where the ECB President, Finance Ministers from Euro area member states and the Eurogroup president discuss a range of financial issues.
Euro Zone October Markit Services PMI (GMT 9 am, Nov 6/Local Time 8 pm, Nov 6) forecast: 54.9 from 54.9
Euro Zone October PPI (GMT 10 am, Nov 6/Local Time 9 pm, Nov 6) forecast (m/m): 0.4% from 0.3%, forecast (y/y): 2.8% from 2.5%
FOMC Member Janet Yellen speech (GMT 1 pm, Nov 6/Local Time 12 am, Nov 7)
Canada Ivey Purchasing Managers Index (seasonally adjusted) for October (GMT 3 pm, Nov 6/Local Time 2 am, Nov 7) forecast 60.2 from 59.6
Federal Reserve New York President William Dudley speaks on the lessons of the Financial Crisis to the economic club at a New York luncheon (GMT 5 pm, Nov 6/Local Time 4 am, Nov 7)
Trading View: The Dollar Index (USD/DXY) looks poised to hit four-month highs. Economic data releases are relatively light today. Central bankers will be the highlight with the BOJ’s Kuroda and the Federal Reserve’s Janet Yellen and Willam Dudley all making speeches today. We can expect Friday’s ranges to hold with the Dollar retaining its bid bias.
EUR/USD – closed near the lows toward the 1.1600 support level. The Euro rallied to 1.1670 following underwhelming US October Employment report. Gains were quickly erased following the upbeat US services and factory data. EUR/USD has immediate support at 1.1600 and 1.1580. Immediate resistance lies at 1.1630/40 and then 1.1670. Political uncertainty in Spain and Germany will be headwinds to any significant Euro rally. Look to sell rallies with today’s likely range 1.1585-1.1635.
USD/JPY – closed at 114.10 from 114.05 Friday. Overnight high traded was 114.43. The Dollar has immediate resistance at 114.30. Immediate support lies at 113.90 and then at 113.60. The latest CFTC/Reuters report saw speculative JPY shorts increase to -JPY 118,869 contracts from -JPY 116,857. The yield on the US Ten year bond slipped 2 basis points. This should limit the topside of USD/JPY with today’s likely range 113.80-114.70.
AUD/USD – slip-sliding away following the disappointing retail sales data. AUD/USD slumped to 0.7680 from 0.7730 after the release of weak retail sales report, falling to 0.7640 lows overnight. The RBA has its policy meeting tomorrow amidst the Melbourne Cup holiday. The RBA is expected to remain on hold. AUD/USD has immediate resistance at 0.7670 and then 0.7690. Immediate support lies at 0.7640 (overnight lows) and then 0.7620. A break of 0.7620 could see 0.7580 and then 0.7550. Likely range today 0.7620-0.7670. Look to sell rallies.
GBP/USD – finished little-changed at 1.3075 from 1.3065 Friday. Overnight low traded was 1.3039, which is where immediate support lies. There is immediate resistance found at 1.3100 and then 1.3130. Immediate support lies at 1.3040 (which is the overnight low). After last week’s dovish BOE rate hike and uncertainty over Brexit negotiations, expect Sterling to remain heavy. Likely range today 1.3040-1.3090. Look to sell rallies.
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