US PAYROLLS BEATS ESTIMATES AS UNEMPLOYMENT RATE DROPS TO 3.8%

The euro was little moved against the dollar today after the two parties in Italy – League and Five Star – announced that they had a deal to form a government. This came after Monday’s decision by the Italian president to veto their appointee for the Economy minister. For now, the deal has lowered the chances of having another election. Another big story today came from Spain, where the prime minister Rajoy was ousted. He will be replaced by Pedro Sánchez who is a socialist who was recently accused of corruption. Yesterday, the EU released inflation data that beat analysts’ forecasts. In April, the inflation rose to 1.9%

In the US, the labor department released the job numbers for May. In the month, the economy added more than 223K jobs, which easily beat the estimated 183K. The unemployment rate surprised the market by moving to 3.8%, which was the lowest level since the 70s. The average hourly wages grew by 0.3%, which was higher than the expected 0.1% growth while the participation rate fell to 62.7%. The U6 unemployment rate (which adds in part time workers) reduced from 7.8% in April to 7.6% in May. These numbers show that the economy is doing well. Some industries have reported a shortage in employees forcing the Trump administration to bring more foreign workers.

The Great Britain Pound (GBP) rose today after the country reported better than expected manufacturing PMI data. The data from Markit showed the manufacturing PMI at 56.9, which was higher than the expected 56.8. On the other hand, China’s manufacturing PMI data by Caixin decreased from 51.3 to 51.1.

EUR/USD

The EUR/USD pair was little moved today even after the positive jobs numbers from the US. The pair is now trading at 1.1680, which is almost equal to where the pair started the week. It is trading at the same level as the 50 and 25-day moving average. Yesterday, the MACD reached the highest level in two weeks. There is a possibility that the pair could move lower slightly based on the oscillators. However, the pair could start a strong upward trend based on yesterday’s strong CPI data.

GBP/USD

The GBP/USD pair rose slightly today after strong manufacturing data from the UK. The pair is trading above the important 50 and 25-day moving average, with its RSI on the 15-minute chart near the overbought position. The parabolic SAR shows that the pair could continue moving higher. If it does, traders should watch out for it to cross the 1.3347 resistance price.

USD/JPY

The USD/JPY pair crossed the important support of 110 on Monday. Since then, the pair continued moving lower to an intra-week low of 108.9. Today, the pair climbed as the employment data from the US attracted more traders to the dollar. It is now trading at the important resistance of 109.6. The pair could continue moving upwards to test the resistance of 110.