USD MOVES LOWER AFTER THE DISAPPOINTING JOBS NUMBERS
The price of crude oil declined today, a day after OPEC members agreed to reduce production. Today, negotiations between OPEC members, Iran, and Russia continued. This is because Iran has requested an exemption of the cuts as it works to cope with the ongoing sanctions. Tehran wants to retain the current production and higher prices to support its economy. Negotiations with Russia too continued today as the two sides weighed the options to stabilize the market. The price of Brent and WTI crude is close to the lowest level since November last year.
Yesterday, Wall Street Journal wrote that the Fed was considering having a wait and see approach to interest rates. The article said that while Fed officials believed that tightening is a good thing for now, they are less sure about the pace of rate hikes in the coming year. Before this, investors had priced in three more hikes in 2019, down from four in 2018. The Fed futures contracts are pricing for another hike this month. In the past few weeks, the US has continued to release weak economic numbers. The trade balance has widened, jobless claims have increased, the third quarter economic growth has been reduced and the general consumer sentiment has reduced.
Today, this trend continued after the Labor department released the NFP numbers. These numbers showed that the economy added 155K jobs, which was lower than the consensus estimate of 200K. The unemployment remained unchanged at 3.7% while wages rose by 3.1, which was in line with estimates. The U6 unemployment rate increased to 7.6% from last month’s 7.4%%. In Canada, the unemployment rate dropped to 5.6% from last month’s 5.8%. The economy added 94.1K jobs, which was higher than the consensus estimates of 10.3K.
World markets were mixed today after the concerns about the arrest of Huawei CFO seemed to disappear. In Asia, the Nikkei rose by 177 points while Chinese stocks declined. In Australia, the ASX 200 ended the day higher by 25 points. In Europe, the Stoxx, DAX, and CAC rose by 40, 85, and 66 points respectively. In the United States, the futures markets pointed to a lower open, with the Dow and S&P shedding 100 and 10 points respectively.
The XTI/USD pair moved slightly lower today as OPEC and non-OPEC members continued negotiations. The movement ignored the drawdown in inventories reported by EIA yesterday. The price is now trading at 51.40, which is closer to last week’s low of 49.50. The RSI is at the neutral level of 42 while the double EMAs are close to the price. Therefore, the price will likely move in reaction to the outcomes of today’s negotiations.
After weeks of declines, the Nikkei rose today to an intraday high of ¥21720. This week, the index has dropped from a high of ¥22,762 to a low of ¥21,062. Its current price is along the 25-day EMA and slightly lower than the 50-day EMA. The RSI is stable at the 50 level while the Average True Range is moving lower. On Monday, the index could continue moving lower although the developments on trade will be the main determinant.
The EUR/USD moved higher after the disappointing jobs numbers. These numbers followed the disappointing jobs numbers released by the ADP yesterday. In recent weeks, all the major numbers from the US were negative except for the continuing jobless claims released yesterday and the ISM manufacturing numbers released on Monday. The pair is now trading at 1.1380, after rising to an intraday high of 1.14100. Therefore, there is a likelihood that the pair will breakout from the channel to the upside as traders wait for the Fed decision on interest rates.