The USD moved higher in anticipation of the US jobs report. That report showed wages were less of a concern with an increase of 0.3% versus 0.4% MoM. Moreover the prior month was revised lower from 0.6% to 0.4%. Good news. The not so good news for a rate perspective is the unemployment rate ticked down to 3.5% from 3.6% (revised from 3.7%). That puts the unemployment rate near full employment which has potential for what wage gains down the road. So the Fed is walking on the tight rope.
In Canada, their jobs report showed strong job gains of 104K versus 8.0 K. The unemployment rate dipped to 5.0% from 5.1%. That is also near their full employment level.
The market reaction has seen the US dollar
US Dollar
The US dollar, (symbol $, code USD) is the fiat currency of the United States of America (USD) and the most widely traded currency globally. It was introduced into the US in the late 18th Century, with paper notes not being distributed until the following century. The US dollar, also informally known as the greenback, is the world’s most foremost reserve currency, due in large part to the importance of the US economy on the world stage. Once backed by gold (in the 1900’s), the USD is now a purely fiat currency, i.e. not backed by a physical commodity. The former gold standard aligned to the US dollar, made both gold and silver the legal-tender coinage of the USA, with the guarantee that 1 USD could be converted to one and a half grams of pure 24 carat gold. However, the gold link was eventually abolished by President Richard Nixon in 1971. Since the gold standard was cut, the US dollar has become the world’s number one reserve currency.This means foreign nations possess large amounts of their cash reserves in USD, accounting for approximately 65% of the world’s foreign exchange reserves.How to Trade the US Dollar?The US Dollar is traded in a variety of ways, most notably on the foreign exchange (forex) market versus other currencies; traded as pairs. Any retail broker offers exposure to the USD in many exchange pairs, given its popularity and liquidity. The USD is involved in the majority of the most traded forex pairs, such as the EUR/USD, the USD/JPY, the GBP/USD and the USD/CHF, known as the “four majors”, and the “commodity pairs”, i.e. AUD/USD, USD/CAD and the NZD/USD.
The US dollar, (symbol $, code USD) is the fiat currency of the United States of America (USD) and the most widely traded currency globally. It was introduced into the US in the late 18th Century, with paper notes not being distributed until the following century. The US dollar, also informally known as the greenback, is the world’s most foremost reserve currency, due in large part to the importance of the US economy on the world stage. Once backed by gold (in the 1900’s), the USD is now a purely fiat currency, i.e. not backed by a physical commodity. The former gold standard aligned to the US dollar, made both gold and silver the legal-tender coinage of the USA, with the guarantee that 1 USD could be converted to one and a half grams of pure 24 carat gold. However, the gold link was eventually abolished by President Richard Nixon in 1971. Since the gold standard was cut, the US dollar has become the world’s number one reserve currency.This means foreign nations possess large amounts of their cash reserves in USD, accounting for approximately 65% of the world’s foreign exchange reserves.How to Trade the US Dollar?The US Dollar is traded in a variety of ways, most notably on the foreign exchange (forex) market versus other currencies; traded as pairs. Any retail broker offers exposure to the USD in many exchange pairs, given its popularity and liquidity. The USD is involved in the majority of the most traded forex pairs, such as the EUR/USD, the USD/JPY, the GBP/USD and the USD/CHF, known as the “four majors”, and the “commodity pairs”, i.e. AUD/USD, USD/CAD and the NZD/USD.
Read this Term move lower and stocks move higher.
In this report I take a look at the change in currency rates
Currency Rates
Currency rates (also known as the exchange rates) are the price at which one nation’s currency is valued against another nation’s currency. It consists of two parts. The base currency and the quote currency. The base is always valued at one, while the quote fluctuates. For example, when observing the currency rate of the euro versus the US dollar, this will be written as EUR/USD, with the euro (EUR) being the base and the US dollar (USD) being the quote. As mentioned, the base currency always has a value of one. So, if we see that the EUR/USD’s currency rate is 1.2000, the ratio of EUR/USD is 1:1.2000. I.e. 1 euro is equivalent to 1.2 US dollars. Or if the euro vs the British pound (EUR/GBP) is trading at 0.7500, it means 1:0.7500, i.e. 1 euro is equivalent to 0.75 British pounds. The base digit (of one unit) is generally not displayed by banks or forex brokers when quoting rates. What Affects Currency Rates?Exchange rates vary slightly depending on whether one is buying or selling. Forex brokers will quote a “bid” price and an “ask” price, where if you’re selling (also known as going short), you’ll pay the bid price, and if you’re buying (also known as going long), you’ll pay the ask price. Even though a real mid-market exchange rate exists, it’s never used by banks or brokers for their customers. The difference between the bid and ask prices is known as the spread. Spreads between different brokers vary. Even among brokers that have very low spreads (often approaching zero for some of the major liquid pairs), it’s required to pay a commission on trades.
Currency rates (also known as the exchange rates) are the price at which one nation’s currency is valued against another nation’s currency. It consists of two parts. The base currency and the quote currency. The base is always valued at one, while the quote fluctuates. For example, when observing the currency rate of the euro versus the US dollar, this will be written as EUR/USD, with the euro (EUR) being the base and the US dollar (USD) being the quote. As mentioned, the base currency always has a value of one. So, if we see that the EUR/USD’s currency rate is 1.2000, the ratio of EUR/USD is 1:1.2000. I.e. 1 euro is equivalent to 1.2 US dollars. Or if the euro vs the British pound (EUR/GBP) is trading at 0.7500, it means 1:0.7500, i.e. 1 euro is equivalent to 0.75 British pounds. The base digit (of one unit) is generally not displayed by banks or forex brokers when quoting rates. What Affects Currency Rates?Exchange rates vary slightly depending on whether one is buying or selling. Forex brokers will quote a “bid” price and an “ask” price, where if you’re selling (also known as going short), you’ll pay the bid price, and if you’re buying (also known as going long), you’ll pay the ask price. Even though a real mid-market exchange rate exists, it’s never used by banks or brokers for their customers. The difference between the bid and ask prices is known as the spread. Spreads between different brokers vary. Even among brokers that have very low spreads (often approaching zero for some of the major liquid pairs), it’s required to pay a commission on trades.
Read this Term for the EURUSD, USDJPY, GBPUSD and USDCAD and outline the bias shifts and levels in play for the day.
The EURUSD has moved back above the 50% of the 2022 trading range at 1.05155. Watch that level today as a barometer
For the USDJPY the price has moved below its 50% midpoint of the move down from the December 15 hi at 133.832. The broken 38.2% 132.81 is a target as are the 200 and 100 hour moving averages on the downside.
The GBPUSD has Topside resistance at 1.19346. Get above that level is needed to increase a bullish bias
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