By Orbex
The monthly payrolls report from the US saw employers adding 224,000 jobs during June. This was higher than the estimates of 162,000 jobs.
The unemployment rate ticked higher to 3.7% on an increased participation rate. The average hourly earnings rose 0.2% on the month to an annualized pace of 3.1%.
The payrolls report soothed concerns about a slowdown in the US economy. Following the reports, investors scaled back their bets of a larger rate cut at the July Fed meeting.
Germany’s manufacturing orders showed a 2.2% decline on a month over month basis in May. Economists forecast a 0.1% decline. On a yearly basis, German manufacturing is down 8.6%.
The euro remained weak on the data besides the stronger USD. Traders will be closely watching the data out of the eurozone ahead of the ECB meeting due later in July. ECB President Draghi has promised to lower interest rates if the economy continues to deteriorate.
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The currency pair broke past the support level at 1.1250 level on Friday. This pushed the EURUSD to test a two-week low at 1.1206 before pulling back slightly. In the near term, we expect the currency pair to test the 1.1250 level to establish resistance. If resistance forms, then we expect the downside bias to push the EURUSD to lower lows. The next main target is seen at 1.1190.
Crude oil prices posted a modest rally on Friday, gaining over 1.50% on the day. The gains came after reports showed that OPEC oil production dropped in June to 2014 lows.
OPEC production was recorded at 30 million bpd, down 170,000 bpd from May. This was the lowest output since April 2014 despite higher production from Saudi Arabia.
Despite the gains on Friday, oil prices failed to clear the resistance level of 57.50. This has kept the bias to the downside. A breakdown off recent lows could validate the bearish flag pattern. This will see oil prices targeting the 50.00 handle. To the upside, if oil breaks past the 57.50 handle, we could expect to see prices settling back within the 60 and 57.50 range that was previously established.
The precious metal was seen giving up the gains on Friday as it extended declines for the third consecutive day. Gold closed 1.18% lower on Friday following the US payrolls report which came out stronger than expected.
The payrolls report dampened expectations of easy monetary policy. Improved market sentiment also helped to keep the price of the precious metal in check.
Gold prices broke past the rising trend line connecting the lows from May 30 and June 17. The breach of this trend line potentially indicates a move to the downside. The minor support at 1383.60 remains the initial barrier. However, a break down below this level could push gold lower to the 1354 handle. To the upside, the resistance level at 1404 will likely keep a lid on the gains.
By Orbex