US jobs number could be overshadowed by Trump troubles
On Friday sees the release of US Non-Farm Payrolls numbers, the last for this year, which is likely to be the most important event this week for global currency markets, but it could be overshadowed by politics.
And it’s the politics that makes for a rather uncertain outlook for USD at the moment.
The consensus is for 200,000 new jobs in November with the unemployment rate unchanged at 4.!%. Though estimates could change over the week, if the number does turn out to be substantially different from analysts’ guesses, then it could be on the upside following robust US economic growth recently. Also, the hourly earnings will be watched to see how wage inflation is performing or not. A 0.3% rise is expected.
However, this potentially rosy picture on the USD could be blighted by troubles for President Donald Trump. Allegations over involvement with Russia simply won’t go away with ex-national security adviser Michael Flynn set to testify against him. Meanwhile, the FBI continues to dig for more evidence and when something surfaces — it seems to undermine USD.
Also, on Friday Congress votes on a funding bill for the US government, which could be acrimonious given the divisive nature of politics there are at the moment. It needs to be agreed by December 8 or the US government will enter shut-down, which would be another potential USD negative.
Indeed, the US’s decisive and messy politics could dampen strong US fundamentals from shinning through into USD strength.
Another important event is that European Central Bank President Mario Draghi speaks on Thursday and that could be a EUR/USD mover. Meanwhile, short bets against USD have been rising strongly recently.
TECHNICAL ANALYSIS: EUR/USD could break-out, but strong resistance beckons
EUR/USD could be set to break-out of a short-term consolidation pattern - the second in nearly three weeks. This could take the pair within shouting distance of resistance levels clustered above 1.2000.
The highest level of EUR/USD of 1.2091 was seen on September 21. Prior to that, the last time the pair reached those sort of levels was back in late December 2014. Therefore taking out 1.2100 could be quite a struggle with the USD bulls likely to put up stiff resistance.
Resistance levels can be seen around 1.1927-8, 1.1942 and 1.1961 and 1.1994 with support at 1.1840, 1.1798, 1.1733 and 1.1667
By Justin Pugsley, Markets Analyst, MahiFX