A DAY OF GOOD NEWS FOR THE FINANCIAL MARKETS
Late yesterday, Donald Trump accepted a meeting request from the leader of North Korea. The news came after a two-day meeting by South Korean officials to North Korea where they held talks with Kim Jong Un. These talks provide an important opportunity for all countries involved to solve a problem that has existed for decades.
Closer to North Korea, in Japan, the country’s Central Bank left interest rates unchanged and gave no indications for the normalization process. The report came a day after the country released the revised figures for the GDP. In Q4, the country’s GDP expanded at a rate of 0.4% and at an annualized rate of 1.6%. This was higher than what the market was waiting for. However, traders are still cautious about the country’s slowing growth, especially after the industrial growth numbers we received last month.
In the UK, official government data showed that the country’s manufacturing was growing at the fastest rate since 1968. Data from the Office of National Statistics showed that manufacturing grew by 0.1% in January, which was slightly lower than what analysts were expecting. As a result, the pound rose against the major currencies. It was up 0.20% against the Chinese Yuan, 0.15% against the euro, and 0.10% against the dollar.
In the United States, official government data showed that the country added 313K jobs in February. This was higher than the 200K the traders were expecting. The private non-farm payrolls rose to 287K from last month’s 238K. The participation rate rose from 62.7% to 63.0% while the unemployment rate remained at 4.1%.
The dollar strengthened slightly against the euro following the impressive job numbers. Initially, the pair rose to the 1.2313 level as traders digested the slow wage growth numbers. There is a likelihood that the pair will take the path of least resistance and test the weekly low of 1.2267 before starting an upward pullback.
The pair continued the upward momentum after the US jobs numbers and a dovish BOJ. As shown below, the pair is forming a trough pattern which means that it could move to test the weekly high of 107.20. Ultimately, the pair could test the 108 level as traders wait for a rate hike from the Fed.
The pound was little changed against the dollar after the US jobs numbers. As shown below, the pair is currently showing signs of an upward rally. Its current price is at the upper side of the Bollinger band which is an indicator that it could rally. It is also at an important Fibonacci Retracement level. The next price target could be 1.38600.