Market Reaction to U.S. Jobs Report
The dollar saw a temporary uptick following a surprisingly positive U.S. jobs report, but overall market responses have leaned more towards optimism than favoring the dollar. Non-agricultural employment rose by 115,000, exceeding the anticipated 62,000. Meanwhile, the unemployment rate held steady at 4.3%, which was also expected. Average hourly wages grew by 0.2% month-over-month and 3.6% year-over-year. This suggests ongoing wage inflation, yet it hasn’t drastically altered the Federal Reserve’s outlook. Additionally, the average workweek increased from 34.2 hours to 34.3 hours, which adds a bit more encouraging detail to the report.
The data collectively suggests that the labor market is holding up well, without compelling the Federal Reserve to adopt a more aggressive policy. Market sentiment seems to be shifting toward the belief that the Fed can afford to be patient, especially if global tensions begin to ease and inflation driven by energy costs starts to cool off. After the report was released, stock prices rose, though U.S. Treasury yields dipped slightly; the two-year yield fell by 2.6 basis points, while the 10-year yield dropped by 2.2 basis points.
Major Currency Pairs Overview
Euro Dollar:
The EUR/USD dipped to support near 1.1754 before bouncing back to around 1.1778. The pair remains within a fairly tight range, with traders anticipating a breakout in either direction. If it moves above 1.1784 and then 1.17956, it could approach April highs between 1.1823 and 1.1836, and possibly even 1.1848. Conversely, a drop below 1.1754 would shift attention to key moving average clusters near 1.1728, 1.1719, and 1.17075.
USD Yen:
The USD/JPY increased after the report, testing the resistance at the 100-hour moving average of 156.87. Sellers, however, pushed it back down, and it’s now retesting the 50% midpoint of the recent range at 156.50. A move below this level might boost sellers’ confidence and increase downward momentum. On the higher end, breaking above the 100-hour moving average could target the 100-day moving average around 157.35.
Pound Dollar:
GBP/USD is currently above the significant area between 1.3575 and 1.3602, with buyers having the upper hand for now. It reached a low of 1.35977 before bouncing back. The next goal would be to surpass yesterday’s high of 1.36317, with further focus on Wednesday’s high near 1.3643 and last week’s peak at 1.36569.
USD/CAD:
A combination of robust U.S. employment numbers and weaker figures from Canada has pushed the USD/CAD pair up sharply. The price has surpassed the swing level of 1.3666 and is closing in on the 38.2% retracement from the March 31 high of 1.3708. There’s additional resistance between 1.37089 and 1.37149, and the 100-day moving average near 1.37203 is another crucial level that buyers will need to breach to reinforce the bullish trend.
USD/CHF:
Initially, USD/CHF rose a bit after the news but then reversed direction, hovering near a new session low of 0.7771. This level also aligns with a 61.8% retracement from the rise in the trading range starting January 28 to the early April high. Yesterday, the pair briefly dipped below that support before bouncing back and then retesting the 100-hour moving average during the Asia-Pacific session. However, sellers regained the upper hand, pushing the pair down again. Although sellers seem to be in control, they need to maintain momentum below 0.7771 to solidify the bearish outlook.
