The US dollar index sell-off continued Monday morning as investors reflected on the latest American jobs numbers. The data, published on Friday, showed that the American economy added more than 235k jobs in August, which was a dramatic decline from the previous month’s increase of more than 1 million. It was not all that bad as the unemployment rate declined to 5.2%, which was the lowest level since the pandemic started. Also, the participation rate remained steady at 61.7% while wages rose by 4.3%. Additional data by the Institute of Supply Management (ISM) showed that the country’s non-manufacturing PMI rose to 61.7 in August.
The financial market will be relatively muted today since the US will be on holiday. Still, investors will be looking at the ongoing deliberations on Joe Biden’s $3.5 trillion anti-poverty plan. Some of Biden’s advisors have recommended shelving the plan, citing the potential rise in inflation. In a piece in the Wall Street Journal last week, Senator Joe Manchin asked Biden to take a strategic pause on the plan. He argued that the pause was necessary since the country has already absorbed more than $5 trillion of aid in the past few months.
US and some European stocks remain close to an all-time high as sentiment in the market improves. The ongoing wave of corporate consolidation has also helped boost sentiment. An analysis by the Financial Times found that deals worth more than $4 trillion have been passed this year. $500 billion of these transactions happened in August, which is usually a relatively quiet month. Deals worth more than $289 billion were passed in the same month in 2020. Some of the key deals announced this year have been GE’s disposal of AerCap and Salesforce acquisition of Slack.
NDX100
The Nasdaq 100 index has been in a strong bullish trend in the past few weeks. It is trading at an all-time high of $15,653. On the daily chart, the index is being supported by the 25-day and 50-day moving averages. It has also managed to move above the key level at $15,155, which was the highest level in August. At the same time, the MACD and the Relative Strength Index (RSI) has been rising. Therefore, the index will likely keep rising as bulls target the key resistance level at $16,000.
EURUSD
The EURUSD declined slightly after strong US non-manufacturing PMI data helped to offset the mixed jobs numbers. The pair is trading at 1.1878, which is slightly below last week’s high at 1.1904. On the four-hour chart, the pair has moved back to the previously ascending channel pattern. It is also slightly above the 25-day moving average. Therefore, the pair may resume the upward trend ahead of the ECB decision.
GBPUSD
The GBPUSD pair broke out higher on Friday after the NFP data. It rose to a high of 1.3890, the highest level since mid-August. The pair then pulled back and is currently slightly above the upper side of the ascending channel. It is also being supported by the 25-day moving average while the MACD has moved slightly below the overbought level. Therefore, the pair will likely move lower as the break and retest pattern forms.
