The US dollar ignored a good report on the labor market, where, on the one hand, employers created many more jobs in January than economists had predicted, and on the other, the unemployment rate rose slightly. Nevertheless, it is already clear that the labor market will continue to be a driver of economic growth in 2020.
According to the US Department of Labor, the number of jobs in the non-agricultural sector increased by 225,000, while economists had expected an increase of only 158,000. Meanwhile, the unemployment rate itself was at 3.6%, while economists had forecasted it to remain unchanged at 3.5%. In addition, the average hourly earnings increased by 3.1% in January, as compared to the same period of the previous year, after rising by 3.0% in December. Economists had expected this indicator to remain unchanged. It's also worth noting that growth in January exceeded last year's average, when the economy created an average of 211,000 jobs every month.
The US dollar ignored this data, as did the yield on 10-year Treasury bonds, which remained at 1.61% after the report was released.
Data on the reduction of inventories in the US wholesale trade did not change the EUR / USD pair, which, after several unsuccessful attempts at growth, still managed to update the monthly lows during the US session. According to the report by the country's Ministry of Commerce, inventories in wholesale trade fell by 0.2% in December 2019 compared to the previous month, while economists had forecasted a decline of only 0.1%. Wholesale sales in December also fell by 0.7%, compared from the previous month.
On Friday, a statement was made by Trump's economic adviser Larry Kudlow, who noted that the coronavirus may delay China's purchases of agricultural goods. This was discussed on the eve of a telephone conversation between Trump and Xi. The Chinese leader assured that he intends to meet the goal for purchases in the amount of 200 billion dollars in the next two years and did not ask for an exception with regard to purchases under the agreement.
The Federal Reserve's report last Friday also focused on the problems of coronavirus, which could affect the global economy. The Fed noted that the possible consequences of the coronavirus in China pose a new risk to the economic outlook, which could in turn, spread to the world economy. The Fed believes that global economic growth slowed last year, but recent indicators pointed to the first signs of stabilization.
Another leading indicator regarding the state of the economy is lending. According to data, consumer lending in the United States increased immediately by $ 22.06 billion in December 2019, after an increase of $ 11.81 billion in November (a revised value from $ 12.51 billion). Credit growth also has a positive impact on retail sales, which is supported by economic growth rates.
As for the technical picture of EUR/USD, the pair remained virtually unchanged. Although the bears reached the support of 1.0940, there was no further downward movement. Most likely, the bulls will try their best to keep the price above this range, which will form a new upward wave, which was expected after the release of the report on the US labor market last Friday. An unsuccessful breakout of 1.0940 will be an additional signal for closing profits on short positions in EUR/USD. The resistance of 1.0980 is also important, as this is where the bears actively returned to the market at the end of last week. As long as trading is below this range, risky assets will remain under pressure.
CAD
Helped by a good report on job growth and a decrease in the unemployment rate, the Canadian dollar managed to hold its position against the US dollar on Friday
According to Statistics Canada, the number of jobs increased by 34,500 in January, while unemployment rate fell to 5.5% from 5.6% in December. Economists had expected job growth of only 15,000. Growth in average hourly earnings also accelerated, reaching 4.2% compared to January last year.
As for the technical picture of the USD/CAD pair, the return to the resistance of 1.3300 is a very strong bearish signal that can lead the trading instrument to the lows of 1.3260 and 1.3235. If the bulls regain the resistance of 1.3300, the upward trend will continue to the highs of 1.3340 and 1.3390.