US DOLLAR SLIPS AS THE UNEMPLOYMENT RATE FALLS TO 4.2%

European stocks rose after a relatively dovish statement by Christine Lagarde, the European Central Bank chair. In a speech, he said that the bank will unlikely make any long-term pledges when they meet later this month. The statement came a few days after the relatively strong Eurozone inflation data. The numbers revealed that the region’s inflation rose to a record high of 4.9% in November. Her statement was contrary to what Jerome Powell of the Federal Reserve told policymakers this week. In his testimony, he said that the bank will likely accelerate the pace of tapering. The DAX, CAC 40, and Stoxx rose by about 0.30%.

The British pound declined against the euro as data showed an increase in the number of Covid-19 cases in the UK. According to the Office of National Statistics (ONS), the proportion of people who tested positive for the virus rose to 1.65% of the population last week. Most of the cases are of the Delta variant. Therefore, there are worries that the Omicron variant will lead to more infections. The currency also declined after the relatively weak UK services PMI numbers. According to Markit, the country’s services and composite PMI declined to 55.9 and 58.5, respectively. These numbers could push the BOE to be relatively dovish later this month.

The USDCAD pair declined after the latest jobs numbers from the United States and Canada. The data showed that the labour market in both countries continued doing well in November. In the United States, the economy added more than 210k jobs in November. The bureau also revised upwards the previous reading from 531k to 546k. The US unemployment rate declined to 4.2% while the participation rate rose to 61.7%. Meanwhile, in Canada, the economy added more than 153k jobs in November while the unemployment rate fell to 6.0%. Still, the biggest challenge for the two countries is that the current Covid wave could disrupt the recovery.

EURCHF

The EURCHF pair declined sharply after the statement by Christine Lagarde. It is trading at 1.0380, which was the lowest level since March 2015. The pair has fallen sharply in the past few years. On the daily chart, it has passed the important support level at 1.0500, which was the lowest level in April last year. It has also moved below the 50-day and 25-day moving averages. Therefore, the path of the least resistance for the pair is lower.

GER30

The German DAX index rose slightly after the dovish statement by Christine Lagarde. It is trading at 15,335, which is slightly above last week’s low of less than 15,000. The index is in the same range where it has been throughout this week. It is between the middle and upper line of the Bollinger Bands. It is also between the 23.6% and 38.2% Fibonacci retracement levels. Therefore, the pair will likely end the week in this range.

EURUSD

The EURUSD pair tilted upwards after the relatively mixed US jobs numbers. The pair rose to a high of 1.1320, which was slightly higher than the intraday low of 1.1286. On the hourly chart, the pair is along the upper side of the Bollinger Bands. It is also in the same range as it was in the past few days. The pair will likely resume the bearish trend as the market reflects on the jobs data.