Daily Insights Report 10/04/17

• 10 Apr 2017

Data released showed that the US economy added the least amount of jobs in 10 months. Worrying data for the US economy showed that nonfarm payrolls increased by 98,000 in March, which is below the 219,000 shown in February. This is the lowest payroll number since May last year as retailers cut jobs while employment in professional, business services, and mining increased. This can be seen in the chart below.

While this data may seem worrying for the US economy, as long as level of 100,000 is maintained, it is in line with population demographics. This slightly weaker jobs report is still consistent with the US economy growing at 2.0% this year, as it was stated by the Federal Reserve Bank of St. Louis (James Bullard).

– Spanish Prime Minister Mariano Rajoy will host a meeting with leaders from France, Greece, Italy, Portugal, Cyprus, and Malta outside Madrid to discuss Britain’s negotiations to leave the EU and the likely effects of its exit from the bloc. Southern European leaders have had meetings in the post to form a common understanding on challenges in the area, including the refugee crisis, and discussing the influence of northern Europe

– Canada and some emerging market economies are scheduled to set their interest rates this week (countries including Argentina, Brazil, and Chile).

– NATO’s Secretary General Jens Stoltenberg will visit Washington and meet with the US president on Wednesday. European leaders remain anxious about the level of US support after the president complained that NATO nations weren’t paying their share.

– The JPY was 0.4% weaker against the Dollar at 111.48.

– The AUD lost 0.3% against the Dollar to reach $0.748.

– The Dollar index was up 0.2% at 101.31, showing that it is on its fourth consecutive day of having some gains.

Commodities

– Gold dropped 0.1% to reach $1,252.78 per ounce.

– Oil prices have been edging higher, extending last week’s solid gains. Brent crude, was up 0.1% at $55.28 a barrel. At the same time, West Texas Intermediate (WTI) crude was up 0.2% to reach $52.33 a barrel.

Technical Analysis

EURGBP

Looking at the daily chart of this currency pair, it can be seen that this currency has been supported by a long-term rising trend line since November. The pair is currently around the 0.8850 level which is around a symmetrical triangle of support. The stochastic indicators are showing that the currency pair is currently in oversold territory.

Looking closer at the chart, it can be seen that the 100 day SMA crossed below the 200 day SMA for the first time since the start of the trend line. The gap between these two averages was the highest a few months ago (see chart). With this kind of crossover, a downside break is possible. Theoretically, it suggests that a breakout could be the size of the base of the triangle formed. In this case, that would be about 500 pips in size.