US jobs data supports shy recovery – Market Analysis – July 2

By: Miguel A. Rodriguez

09:45, 14 September 2020

Macro data seems to get better, even though there are strong signs of a pandemic comeback

The stock markets experienced a notable rise after the publication of the North American employment figures.


Nonfarm Payrolls far exceeded the expected figure with 4800k vs. 3000, and the unemployment rate fell to 11.1% vs. 12.3% expected. 

These economic figures are well above market forecasts. They show that economic recovery is underway after having suffered the biggest crash in such the shortest period in history.

The enormous and immediate monetary policy measures that have flooded the system with liquidity have contributed to all this. 

It only remains to resolve the element of most considerable uncertainty that is the evolution of the pandemic; any improvement in this sense would provide a significant upward boost to the stock indices. It would take the pressure off the fixed income market, which in the United States has reached the lowest yield levels in its entire history.

Stock performance


The American stock markets rise above 1.5%, but the best performer has been the European Spain35. 

The Spanish index rises above 4% and technically exceeds the 100-day SMA level at 7400, which coincides with the first Fibonacci retracement of the entire previous bearish leg. 

The next target is at the 0.50 Fibonacci retracement level at 7939, which coincides with the high reached in early June.

 

The positive evolution of infections in Spain and the manifest support of France and Germany for the implementation of the European rescue fund that greatly benefits this country may be the catalysts for a continuation of this upward trend that can lead to 8450, Fibonacci retracement level 0.618 soon.

USD denominated assets

GOLD has slowed its bullish momentum to correct to the $1.758-1760 area where its intermediate support sits. 

This movement can only be classified as a technical correction after more than two weeks of constant increases, which has led to overbought levels and has caused bearish divergences in the 4H RSI chart.


 

Below the indicated central support area is the primary support at $1740, a level that should not be lost to maintain the current uptrend.

The fundamental reasons for the continuation of this upward movement of GOLD remain intact, especially the increase in the global monetary base, and historically low rates, and a potentially weaker US Dollar that will add new fundamentals to a bullish GOLD.


Following the announcement of employment figures, the USD has weakened initially and has pushed EUR/USD higher to reach the 1.1300 zone, and then consolidate below this level. 

The pair needs to break out of the 1.1350 zone at a daily close to gain bullish momentum, leading it to 1.1500 as the first target. Tomorrow is a public holiday in the United States, so the liquidity of the market will decrease, notably mainly in the afternoon. On occasions like these, there is usually an increase in the volatility of some assets.


 

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