The U.S. market had three reasons to celebrate today: More jobs were added than expected in July....
The U.S. market had three reasons to celebrate today: More jobs were added than expected in July (117K actual vs. 89K expected), unemployment rate fell to 9.1% from 9.2% and average hourly wages rose. The data for May and June were also revised up by a combined 56K. This positive news comes as a relief for investors who saw the Dow Jones plunge over 500 points yesterday. Right after the release, we saw the EUR/USD spike 55 pips breaking the psychological level of 1.4200. However the level was not sustained as traders were digesting the news. The pair retraced back to the original level of 1.4160. Since then the pair has been trading in the range between 1.4130 and 1.4220. A break below 1.4125 could see the pair plunging to the support level at 1.4054.
To the north, the Canadian economy added 7,100 jobs which is below the market expectations of 17,700. This is the fourth straight month the Canadian economy has added jobs. On the positive side, the unemployment rate fell to 7.2% from 7.4% in June. The Canadian economy has recovered faster than the U.S. economy as Canada benefits directly from high prices of commodities such as Oil. The Canadian Dollar has fallen since the beginning of this week as oil prices have declined given the concern of global growth. We expect CAD to decline in the coming days and a break above 0.9800 could send USD/CAD to parity (1.000).
From the Euro zone, UK producer price index rose to 5.9% in July 2011 backed by the rise in food and clothes costs. This was the highest growth since 2008. The German Industrial production was down 1.1%. Overall the European data did not move the market pre-US session as everyone waited in the sidelines for the US employment numbers.
Eugene Ross, analyst
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