THE AUSSIE LITTLE CHANGED AFTER ENCOURAGING EMPLOYMENT DATA
The Aussie is little changed following the release of January’s employment numbers by the Australian Bureau of Statistics. In January, the economy created 16K jobs which was higher than the analysts’ estimates of 15.3K. The participation rate and unemployment rate remained unchanged at 65.7% and 5.5% respectively while the female participation rate rose to the highest level in history. After the data was released, the pair rose by 0.30% before moving lower.
In the United States, the Philadelphia Fed Manufacturing Index of 25.8 beat analysts’ estimates of 21.1. This is an indication that manufacturing is doing well following the passage of the tax reform package. At the same time, the Bureau of Labor Statistics released the producer purchasing index of 0.4%, which was in line with the analysts’ forecasts. The initial jobless claims of 230K was also in line with the analysts’ forecasts.
The Canadian dollar was also little changed against the dollar following the release of employment data from ADP. The data showed that the economy added 10.7K jobs compared with last month’s job losses of more than 7K people.
The dollar fell slightly against the euro following Wednesday’s inflation data which rose more than expected. This was a sign that the Fed would possibly move to hike rates to contain the rising rate of inflation. The pair is currently trading exactly at the 14 and 25-day moving average while the average directional index is at 21. The RSI is at 48. All this show that using technical analysis, it is difficult to predict accurately how the pair will move.
The Australian dollar was little changed against the dollar following the release of the employment data. As shown below, the pair has formed a symmetrical triangle pattern. This coupled with the low ADX numbers indicate that the pair could break out in either direction.
The USD/CAD pair has made some recovery following the sell-off that started yesterday to a low of 1.2464. As of this writing, the pair has recovered to the 23.6% Fibonacci Retracement level of 1.2508. The pair is now trading above the middle Bollinger band, and slightly above the upper band. Traders should watch a break away from this band which could be an indicator that the pair could continue moving up.