USD Weakened By Job’s Miss

Jun 07 21, 10:36 GMT

The USD retreated against a number of its counterparts on Friday and during today’s Asian session as the US employment report seemed to be weaker than expected, albeit better than last month. It should be noted that the release seems to ease the pressure on the Fed to taper its QE program somewhat, given the high inflation rates released in the past weeks for April and may have reversed some of the market worries for the economy running hot. At the same time US Treasury Secretary Yellen stated that high rates would be a plus for the US, after the G7 summit, while at the same time pushed ahead with Biden’s $4 trillion spending plans. The pound seems to remain rather stable against the USD and the EUR yet seems to edge lower against safe havens JPY and CHF as cases of Covid 19 are slightly on the rise and tend to create some worries. It should be noted that the reopening of the UK may be delayed should the virus continue to spread which could weaken GBP given the current uncertainty. Overall though a delay in the reopening of the UK economy, should it be limited to a week or two does not alter the improved economic outlook of the UK.

AUD/USD may have scored the most gains from the USD weakness and on its upward move broke the 0.7665 (S2) and the 0.7725 (S1) resistance lines, both now turned to support. Given the pair’s stabilisation especially in the Asian session, we tend to maintain a bias for a sideways motion for the pair. Please note that the RSI indicator in the 4-hour chart continues to run along just above the reading of 50 and could imply a rather indecisive market. Should the pair find fresh buying orders along its path, we may see AUD/USD breaking the 0.7785 (R1) resistance line in search of higher grounds. Should a selling interest be displayed by the market, we expect AUD/USD to break 0.7725 (S1) support line and aim for the 0.7665 (S2) support level.

GBP/USD on the other hand without much volatility edged higher, breaking the 1.4145 (S1) support line, now turned to support. Overall, the picture of the cable’s movement remains unchanged, with a rather steady sideways motion just around the 1.4145 (S1) support line, hence we tend to maintain our bias for a range bound movement. Please note that the RSI indicator below our 4-hour chart remains near the reading of 50, as the market still hasn’t decided on the direction of the pair’s next leg. Should the bulls take charge of the pair’s direction, we may see the pair aiming if not breaking the 1.4275 (R1) resistance line. To the downside and should the bears take over, we may see cable breaking the 1.4145 (S1) support line and aim for the 1.3990 (S2) support level.

Other economic highlights today and the following Asian session:

Today during the European session, we get Germany’s industrial orders for April, Switzerland’s, CPI rates for May, UK’s Halifax House prices growth rate for May and Eurozone’s forward looking Sentix index for June. During tomorrow’s Asian session, we get from Japan, the current account balance for April as well as the revised GDP rate for Q1.

As for the rest of the week:

On Tuesday, from Germany the industrial output for April and June’s ZEW indicators, from the Eurozone the revised GDP rate for Q1 and Canada’s trade data for April. On Wednesday, we get China’s inflation measures for May, while the Bank of Canada will be releasing its interest rate decision. On Thursday, we get Japan’s Corporate goods prices growth rate for May, also we note the release of Norway’s, the Czech Republic’s and Sweden’s CPI rates for May, the European Central Bank is to release its interest rate decision, while from the US we note May’s CPI rates and the release of the initial jobless claims figure. On Friday, we get from the UK the GDP rates for April as well as the manufacturing output growth rate for the same month along a number of indicators, while from the US we note the release of the preliminary University of Michigan consumer Sentiment for June.

AUD/USD H4 Chart