The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
Better Than Expected NFP, But Unemployment Ticked Higher
The US Jobs Report came in with much better-than-expected data. The economy added over 850K new jobs in June compared to 583K in May, while it had been anticipated to add around 720K new jobs. This is the first time in over three months the new jobs data comes higher than expected.
In general, jobs creation is currently healthy. Private Payrolls added around 662K, while it had been anticipated to add around 615K. Yet, Manufacturing Payrolls added around 15K vs. 25K estimated.
Wage’s growth spiked up again. This will keep inflation fears alive. YoY Average Hourly Earnings advanced to 3.6% in June up from 1.9%, while MoM increased by 0.3% inline with the market estimates and slightly lower than the previous 0.5%.
However, the Unemployment Rate ticked higher again to 5.9% up from 5.8%, even though the estimates were to decline further to 5.6%. Such uptick comes on the back of higher labor force participation rate.
What does US data mean for traders?
The figures we got today represent a new positive factor for the US Dollar. It might act as the first reason for a possible upside retracement. Still, technical indicators are still suggesting that the Dollar needs to take a quick break before the upside trend resumes. As for the Fed, the numbers are highly welcome, despite the upside tick in Unemployment Rate, while Wages might be the main concerns for now. Yet, there is no reason to believe that the Fed will keep the current policy unchanged until the end of the year.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
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This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.