The forex trading week has come and gone. Time to take a look at the currencies and/or currency pairs that were on the move and what moved them. Were you able to profit from any of this week’s top movers?
Looks like the main theme for this trading week was demand for the Aussie and pound, with the Loonie being the most vulnerable currency of them off all. Let’s take a look at what drove price action for the top movers, shall we?
Overall Positive UK Jobs Data
- Jobless rate: 5.3% vs. 5.4% expected, 5.4% previous
- Employment rate: 73.7% vs. 73.6% previous
- Change in claimant count: 3.3K vs. 1.6K expected, 0.5K previous
- Average earnings index: 3.0% vs. 3.2% expected, 3.0% previous
For the July to September period, the UK Office for National Statistics reported that the jobless rate in the UK ticked lower to 5.3% from 5.4%, which is a seven-year low. The employment rate, meanwhile, ticked higher to 73.7% from 73.6% previously, which is the highest ever in recorded history since records began in 1971.
It wasn’t all happiness and rainbows, however, since claimant count change printed a net increase of 3.3K people looking for unemployment-related benefits, which is double the expected figure. And while wage growth grew at the same rate as last time, the details of the report revealed that it was actually due to a 15% surge in bonuses. And if we disregard bonuses, we actually only get a wage growth of 2.5%. That’s a sudden drop from 3.0%, wouldn’t you agree?
Pound pairs were ranging for the most part during the past couple of days before the jobs report was released, but the pound then began slowly getting some buyers during the Asian session ahead of the jobs report. And when the employment indicators finally came out as mixed, pound bulls and bears briefly fought it out before the bulls ultimately emerged as the victors, probably because the BOE is more concerned with full employment and labor indicator related to those were mostly positive.
If you want a more in-depth look at the UK jobs report, take a look at Forex Gump’s writeup here.
Upside Surprise for Australian Jobs Data
- Jobless rate: 5.9% vs. 6.2% expected, 6.2% previous
- Employment change: 58.6K vs. 14.8K expected, -0.8K previous
- Labor force participation rate: 65.00% vs. 64.86% previous
Aussie pairs were trading sideways and minding their own business until the Australian Bureau of Statistics (ABS) released its jobs report on Thursday, causing the Aussie to spike higher. And if you took a look at them bullet points, then you already know why – the jobless rate suddenly dropped to 5.9% when it was expected to hold steady at 6.2% while the Australian economy generated a net increase of 58.6K jobs when only a net increase 14.8K was expected. Crikey!
Forex Gump took a closer look at the report (read his write-up here) and concluded that the strength in the Aussie jobs market seems legit, but he also warned that the ABS has been getting some flak lately and that some market analysts are pointing out that the jobs figures are probably overstated. Still, that didn’t stop forex traders from buying up the Aussie.
Also, the very upbeat jobs report probably squeezed out forex junkies who are expecting another rate cut. After all, the RBA was less dovish in its most recent rate statement, with RBA Governor Glenn Stevens stating that they decided to keep rates on hold because “prospects for an improvement in economic conditions had firmed a little over recent months,” and the recent jobs report certainly helps to support that view.
Oil Prices Slump Hard (Yet Again)
- US crude (CLZ5) down 8.71% to $40.74 per barrel for the week
- Brent crude (LCOF6) down 6.63% to $44.47% per barrel for the week
- US crude oil inventories: 4.2M vs. 0.8M expected, 2.8M previous
Oil prices had the biggest weekly drop in eight months during the trading week, dragging most Loonie pairs down with them. Brent crude was down 6.63% to $44.47 per barrel, which is the first time that Brent crude fell below $45 per barrel since August. Meanwhile, US crude fell 8.71% to $40.74 per barrel, which means that it’s currently hovering above six-and-a-half year lows.
The bulk of the intraweek decline occurred on Thursday when the figure for US crude oil inventories registered a much larger buildup than anticipated despite slowing US production, sparking concerns over lower demand for oil, and causing US crude to drop by almost 4% on that day. Ouch!
Oh, to the forex newbies out there, you may wanna check out our School’s awesome lesson on How Oil Affects USD/CAD if you’re wondering what oil has to do with Canada and the Loonie.
Do you think these catalysts were enough to spark longer-term forex trends or did they just cause a knee-jerk reaction? Better keep these market themes in mind when planning your trades for next week!