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Market Brief
Today has started well for the UK economy with the Office for National Statistics publishing better than expected employment data.
The unemployment rate in the UK down to 4.8% in the three months to March of 2021, with market expectations slightly higher at 4.9%. The unexpected fall in unemployment comes at a time when the UK has been under lock down conditions so seeing an increase in 84,000 jobs is very encouraging. The data shows that the peak in unemployment came in December 2020 as the UK went into the 2nd wave lockdown around Christmas, and now that the majority of vulnerable people have been vaccinated things may improve even faster.
The UK’s average earnings for March came in as expected at 4.6% and up 0.2% from the previous reading.
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The GBPUSD has broken through the balance area from last week and is now rising towards the 1.4200 level. If that important and psychological level does act as a solid ceiling the next bullish milestone will be a close above the 1.4240 level which then removes the previous swing high from the 24th of February 2021.
The ActivTrader sentiment index shows that 68% of the traders on the platform are shorting the pound at these levels and as they increase their shorts the more, they get squeezed.
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The US dollar index has finally given up the $90 support level and we should see an acceleration to the downside to test the previous daily swing lows formed on the 25th of February and the 6th of January 2021.
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The weakening US dollar is giving the Gold bullish breakout some momentum and also it is propping up Oils latest move to the upside. President Biden last night said that the USA is preparing to send out vaccines to the parts of the world inmost need, which is helping traders feel more confident that the drags on the global economy due to the pandemic will be eased. The EIA predicts that oil demand will outstrip supply as economies flatten the infection curves and re-open.
Japan’s GDP came down by 5.1% year-on-year in the first quarter of 2021, according to a preliminary report released by the country’s Cabinet Office.
The annualized value of goods and services produced by the nation in the three-month period marked a lower decrease than the estimated drop which stood below 5%.
Japan is currently under tighter restrictions to try and get on top of their COVID-19 outbreak ahead of the summer Olympics.
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The USDJPY is falling under the weight of the US dollar against the major forex currencies and is currently resting on the years supporting trend line. A break lower could be the start of a major move to the downside.
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The EURUSD continues to push on higher ahead of Flash data out of the Eurozone this morning. EU GDP figures are expected to come in at previous levels and still in contraction for both the quarter-on-quarter and year-on-year data.
The ActivTrader sentiment indicator has the EURUSD traders increasing their short positions with 67% bearish versus the 33% who are trading with the trend.
