Higher Than Expected JOLTS Data Pushes US Dollar Higher
The release of JOLTS data today shows that the US has even more vacancies than expected, which was already high. That should give the Fed confidence to raise rates by 75 basis points tomorrow.
The United States released most of the important data from the start of the month, according to the ISM industrial PMI for October, which came in at 50.2 vs. 50 expected and 50.9 last. The new orders and employment components were both stronger, as long as the price component fell to 46.6 from 51.7. However, the markets turned their collective attention to the second tier data that was released alongside the ISM data. The JOLTS, Job Openings and Labor Turnover Survey, has raised the name of vacancies in the United States from 437,000 to 10,720,000 attention! The previous reading was 10,200,000.
This is the last jobs data the Fed will see before it releases its decision on Wednesday on the size of the interest rate hike. The question surrounding the JOLTS data is not necessarily about Wednesday’s announcement. The Fed has well choreographed the intention to raise 75 basis points, which would bring the federal funds tax to 4%. The question has now turned to “Would you like to discuss a 50bps, or a pivot, for the December meeting”? With an impression of JOLTS showing that vacancies are plentiful, will the Fed hint that it is ready to pivot? On the contrary, the JOLTS print will give the Fed the confidence to keep raising taxes. Markets may now have to wait for Friday’s nonfarm payrolls printout for a better idea of what the Fed might do at its December meeting.
Due to the higher than expected JOLTS data, the US Dollar was appreciating as traders feared the pivoting edge would look to pivot in December. the couple EUR/USD moved lower in a commanded channel after Feb. 10, when the pair traded near 1.1500. The EUR/USD pair followed a local low on September 28, due to the lower trendline of the channel at 0.9536, and it bounced back. On October 25, the pair crossed the trendline above the channel and the 50-day moving average at sunset at 1.0080 on October 26. Since then, the pair has retreated. With US Dollar strength today, EUR/USD is now testing support at the upper trendline of the channel and the 50-day moving average near 0.9884.
EUR/USD daily chart
On the 4-hour chart, the price of the EUR/USD pair leaves a return to the 38.2% Fibonacci retracement level, from the highs of September 28 to October 26 after 0.9883. If the pair continues to decline, the support level continues to be the 50% retracement level of the same period at 0.9818, as there is an uptrend line from the start of September 28 past 0.9773 . If the price breaks below the level, the next level of support is the 61.8% Fibonacci retracement level for the above mentioned timeframe at 0.9753. However, if the support is there and the EUR/USD pair is higher, the first resistance is the psychological level of the figure around 1.0000. Above there, the next level of resistance is seen at the October 26th highs at 1.0094, September 12th highs at 1.0198.
EUR/USD 4 hour chart
The JOLTS report today shows that the United States has even more vacancies than expected, which was already high. That should give the Fed confidence to raise rates by 75 basis points tomorrow. However, many expect the FOMC to discuss a “just” 50 basis point hike at the December meeting. Does today’s employment data change that? Some thought it was possible and they bought the US dollar. However, we will have to wait for tomorrow’s FOMC release to find out for sure!
By Joe Perry, CMT, FOREX.com » Official Site
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