Daily Key points: US employment report for October weakens the greenback

The USD tumbled on Friday, as the US employment report for October, despite a better-than-expected Non-Farm Payrolls figure disappointed traders, as the unemployment rate rose beyond market expectations and the average earnings growth rate slowed down. The mixed results though may imply that the US employment market may have started to loosen up a bit, yet in our opinion still remains tight enough for the Fed to continue its aggressive rate hiking path. US stockmarkets on the other hand tended to gain putting a halt to a four-day losing streak, yet attention may start shifting away from US stockmarkets as most, but not all, high profile companies have allready issued their earnings reports for Q3. Next big test for the USD and US stockmarkets is to be the release of the US CPI rates for October on Thursday. At the same time, it should be noted that the Canadian employment data were better than expected with the employment change figure reaching a sky high 108k and the unemployment rate remaining unchanged at 5.2%, and the picture of the Canadian employment market tended to provide additional support for the Loonie. Also, the Aussie gained, despite China’s trade data being somewhat disappointing for October with the import growth rate dropping in the negatives.

EUR/USD was on the rise on Friday, breaking above the 0.9900 (S1) resistance line, now turned to support. We tend to maintain a bias for a sideways motion of the pair currently yet we note the bullish tendencies given that the RSI indicator below our 4-hour chart is at the reading of 60. Should the bulls actually maintain control we may see the pair breaking above parity level (R1) and aim for the 1.0095 (R2) line. Should the bears be in charge we may see the pair breaking the 0.9900 (S1) line and aim for the 0.9810 (S2) level. 

AUD/USD was on the rise on Friday breaking the 0.6345 (S1) resistance line now turned to support. Since then though the bullish tendencies of the pair seem to have calmed down, hence we tend to expect a rangebound movement of AUD/USD. Should the buyers regain the initiative, we may see the pair breaking the 0.6520 (R1) resistance line and aim for the 0.6670 (R2) level. Should a selling interest be maintained we may see the pair breaking the 0.6345 (S1) support line and aim for the 0.6170 (S2) support level.

Other highlights for the day:

During the European session today, we note the release of Germany’s industrial output growth rate for September, UK’s Halifax House prices for October, Eurozone’s construction PMI for the same month, and Eurozone’s Sentix index for November. On the monetary front we note the pre-recorded comments of ECB President Lagarde, ECB board member Panetta, while later on BoE’s chief economist Pill and Cleveland Fed President Mester speak. During tomorrow’s Asian session, we note Richmond Fed President Barkin’s speech, while BoJ is to release the summary of opinions for the October meeting. As for financial releases we would note Japan’s All Household spending for September, while from Australia we get the consumer confidence for November and the Business conditions and optimism for October.    

As for the rest of the week:

On Tuesday, no release of high impact financial data is planned, yet on a fundamental level we highlight the midterm elections in the US. On Wednesday we get Japan’s current account balance for September and China’s inflation metrics for October. On Thursday we highlight the release of the US CPI rates for October while we also note the release of Norway’s and the Czech Republic’s inflation metrics for the same month as well as the US weekly initial jobless claims figure. Finally on Friday we note the release of Japan’s corporate goods price growth rate for October as well as Germany’s final HICP rate for the same month, UK’s preliminary GDP rates for Q3 and from the US the preliminary University of Michigan consumer sentiment for November.

EUR/USD H4 Chart

Support: 0.9900 (S1), 0.9810 (S2), 0.9700 (S3)

Resistance: 1.0000 (R1), 1.0095 (R2), 1.0195 (R3)

AUD/USD H4 Chart

Support: 0.6345 (S1), 0.6170 (S2), 0.5980 (S3)

Resistance: 0.6520 (R1), 0.6670 (R2), 0.6835 (R3)

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