- The dollar rebounded against a basket of six majors after the initial decline following the non-farm payrolls data which came in significantly disappointed expectations at 148,000 jobs added in December versus 190,000 expected released last Friday night.
- The non-U.S. currencies traded mixed while the gold closed lower slightly due to increased odds for FOMC rate hike in March to 73% from 70.2% after U.S. wage growth in December came in slightly better than the previous reading and expectations at a 0.3% increase in average hourly earnings month-over-month.
The dollar closed higher slightly on Friday 5 January due to increased odds for FOMC rate hike in March to 73% from 70.2% as the result of slightly-higher-than the previous reading and expectations at a 0.3% increase in average hourly earnings month-over-month despite the initial decline following the non-farm payrolls data which came in significantly disappointed expectations at 148,000 jobs added in December versus 190,000 expected. The dollar rally was capped by U.S. December ISM non-manufacturing index, however, which came in slightly-worse-than both the previous reading and expectations at 55.9. The dollar downtrend remained intact with price action generally evolving in a Symmetrical Triangle pattern last week.
The dollar index (DXY) saw its short-term moving averages flattened after consolidation below its long-term moving averages which remained bearish and divergent. Given that the MA still showed bearish continuation pattern, it will be interesting to watch whether or not the price could extend decline on the week.
（DXY H4 chart）
As to non-U.S. currencies, the euro closed lower in the choppy Friday within uptrend on the 4 hour chart, targeting downside support at H4-period EMA30. Having found support at H4-period EMA30, the British pound closed higher slightly in the choppy trading following U.S. NFP. The sterling seemed to resume its uptrend in the very beginning of the new trading week. The Aussie dollar continued to grind higher and its rising channel remained intact. With repeatedly formed bearish divergence pattern in its MACD indicator on the 4 hour chart, however, the commodity currency is expected to stage a corrective decline going forward, not if but when.
（GBPUSD H4 chart）
Switching gears to precious metals now, the gold rebounded again above its support at H1-period trend line after it briefly pushed back to 1313.5 on the U.S. NFP data. Its modestly strong uptrend remained intact on the 4 hour chart. With further potential upside momentum in Monday morning, whether or not the precious metal could create a new high from last week will be important to observe.
（Gold H4 chart）
By JasonZou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.