Payroll triggers profit-taking on Dollar & Gold dramatically bounces

November 10, 2014

A big pullback of the Dollar happened on Friday as the non-farm payroll was lower than expected. The October payroll was 214K making it the ninth consecutive month that it had been higher than 200K. The unemployment rate dropped to a six year low of 5.8%. Such results can only suggest that businesses have a growing sense of confidence in the US economy believing that domestic demands won’t be affected by the weakness of Eurozone and emerging markets. Nevertheless, the bears took the opportunity pushing up other majors, even when the data was not so much of a disappointment. This is also most likely due to traders taking their profits after an almost-whole-week rally of the Dollar.

The Euro Dollar rebounded back to 1.2450, still suppressed by a short-term bearish trendline and the former support level at 1.25.

The Aussie Dollar also tried to take back the 0.8650 level broken last Wednesday, but eventually closed at 0.8630. The bearishness remains and the pair is heading towards the 0.85 mark. The medium term target may be 0.8150 and 0.80.

The continual falling growth rate in China’s imports reveal how even the dampened prices of commodities could not spark the Chinese importers and manufacturers to increase the stocks beyond usual levels. The news may impose a negative effect on the Aussie.

Personally, I have to say, the $46 reverse on the gold price in one day is quite impressive. Should bears be worried? I don’t think so. At least, not yet. Gold has fallen by $124 in only 13 trading days. A rebound is surely to be expected. Also, the broken three-bottom $1180 level has not been recovered. Technically, the price level now provides a good chance for selling, not buying. Unless the price closes beyond this critical level, I will remain bearish on my opinion on gold.

The Asian stock markets changed little on Friday. The Nikkei Stock Average rose by 0.52% to 16880. The Shanghai Composite lost 0.32% to 2418. The ASX 200 gained 0.78% to 5549. In European stock markets, the UK FTSE was up 0.25%, the German DAX lost 0.91% and the French CAC Index slid 0.89%. The US market kept their strength though the weaker-than-expected payroll. The S&P 500 closed flat at 2032. The Dow rose 0.11% to 17574, while the Nasdaq Composite Index dropped 0.13% to 4632.

On the data front, Australian Home Loans may catch some local traders’ eyes. China CPI and PPI will be at 12:30 AEDST.

Have a great trading day!

Anthony

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