At the beginning of the trading week, expectations for employment growth in the US were growing. The employment index in the manufacturing sector showed an increase to 51.5 against a decrease to 48.4 a month earlier. However, further statistics were disappointing. The number of jobs was down to 123,000, according to ADP research institute data that were released on Wednesday. The biggest decline is in the entertainment, hospitality, and retail industries. November data was revised downward to 304,000 workplaces.
The most important leading indicator for the labor market is the ISM Service Sector Employment Index. On Thursday, the general index showed an acceleration in growth, which had a positive effect on the dollar index. Business activity is growing, but employment in December fell to 48.2 against growth to 51.5 a month earlier.
A survey of economists showed that the average expectation of employment growth in December is 71,000, and the unemployment rate will rise to 6.8%. The number of jobs in the private sector jobs remains nearly 10 million fewer than before the pandemic.
The sharp jump in the number of jobs created in the third quarter was due to the exit from social restrictions during the first wave of the COVID-19 pandemic. Now this effect is coming to an end. A significant decrease in the number of new jobs compared to November will be a wake-up call for investors. The stock market is in stark contrast to the labor market data, and the sector isn’t showing any signs of a sharp recovery.
The dollar index is recovering before the NFP release. Greenback shows growth against most currencies on the back of the difference in statistical data. If the data in the service sector came out negative in Europe, then there is a significant increase in the US.
Let’s consider the current technical news in the dollar index.
Support levels: 89.70, 89.39, 89.18
Resistance levels: 90.69, 90.99
The technical news in USDX has started to show signs of correction. On the hourly time frame, a break-through of the moving averages occurred. The ADX has rebuilt to the north. If the quotes hold above the first support level of 89.70 and the moving averages at 89.60 at the end of the day, further correction will be possible.
