Surprisingly Strong US Jobs Helps Dollar

The USD enjoyed solid gains on Friday after the November Nonfarm Payrolls came in much stronger than forecast. November NFP came in at 146k vs. 93k forecast and the Unemployment Rate fell to 7.7% vs. 7.9% forecast. USD/JPY shot higher but was reversed later in the session as dollar buyers took profit although stock markets held onto gains. Looking ahead, no economic data released.

The Euro (EUR) EUR/USD spent Friday on the back foot falling below 1.2900 after the strong NFP before staging a relief rally into the weekend. The market has gapped (gap on chart) lower Monday with weekend news that Italy’s Monti will resign after he passes the countries budget. The EUR/USD uptrend is under threat given the falls post ECB but the FOMC meet this week and they could hurt the USD.

The Sterling (GBP) fell but not as drama the EUR/USD and instead we saw some EUR/GBP selling back to 0.8050 from 0.8100 previously. GBP/USD fell to support just above 1.6000 and we have recovered to 1.6040 in Asia Monday. The outlook is mixed with range trading suggested while we wait for a trend to develop. Looking ahead, BOE Governor King forecast to speak. October German Trade Balance forecast at 15.9bn vs. 17.0bn previously.

The Japanese Yen (JPY) USD/JPY was boosted by the NFP figures from Y82.30 to Y82.80 before reversing to Y82.20 in tricky trading that caught the market long. The looming elections have created a lot of Yen sellers with the promising of unlimited easing from the opposition who are currently leading in the polls. EUR/JPY and GBP/JPY have both fallen back from recent trend highs and we are threatening more losses if the majors continue to wilt.

Australian Dollar (AUD) the AUD/USD fell back to 1.0460 and then tested 1.0500 in very quiet trade for a Friday NFP release. Positive US stocks are supporting the commodity currency while the EUR/USD selling is boosting the dollar strength so the AUD/USD is caught between the two flows. Update Chinese Trade Balance falls to 19.6bn vs. 32bn previously.

Oil And Gold (XAU) Gold tested support under $1690 immediately after the NFP release but as with the USD/JPY move higher the market then reversed to fresh day highs. OIL/USD got a boost from the strong US jobs numbers but this was quickly reversed back to $86 supports were we closed.

Pairs To Watch
EUR/USD: 1.2880 support now critical for bulls

XAU/USD: Back above $1700 and grinding higher again?

TECHNICAL COMMENTARY