Dollar Surge On Upbeat NFP Job Data

* The dollar surged alongside the Treasury yield after last Friday’s NFP beat expectations.

* Gold prices plunged for 2 sessions straight as the dollar strengthened.

* All eyes are on Tuesday’s RBA interest rate decision.

Fundamental Overview

Last Friday’s robust U.S. non-farm payroll report, revealing an increase of 353,000 jobs, surpassed the previous figure of 333,000, exerting significant influence on the market. The data indicates that the U.S. labour market remains robust. Consequently, the U.S. dollar exhibited a notable surge of nearly 1%, impacting the prices of commodities such as gold and oil, which are sensitive to a strengthening dollar. Federal Reserve Chairman Jerome Powell, in a televised interview, expressed that the possibility of a rate cut may need to be reconsidered after March. Powell emphasised that the central bank is awaiting further evidence to confirm that the country’s inflation rate is descending to a sustainable 2%.

Looking ahead, the Reserve Bank of Australia is anticipated to announce its interest rate decision on February 6th. It is expected that the Australian central bank will maintain interest rates at a decade-high level to balance pricing risks and recession concerns. Decisions and statements from these central banks continue to shape market dynamics.

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Current rate hike bets on 20th March Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (65%) VS -25 bps (35%)  

Economic Calendar

(MT4 System Time)

Source: MQL5  

Market Movements

DOLLAR_INDX, H4

The Dollar Index surged following the release of the upbeat Nonfarm Payrolls (NFP) job data last Friday, reaching its highest level since mid-December. The dollar’s momentum was further fueled by a hawkish statement from the Federal Reserve’s chair during a weekend TV interview. The Fed chief dismissed the possibility of an interest rate cut in March, emphasising the continued strength of the U.S. economic performance.

The Dollar Index traded strongly and broke its near-resistance level. The RSI is on the brink of breaking into the overbought zone while the MACD is moving upward and continues to diverge. 

Resistance level: 104.60, 105.60

Support level:103.85, 103.05

GOLD，H4

The dollar saw a robust surge following the release of the positive Nonfarm Payrolls (NFP) data and a subsequent hawkish statement by the Federal Reserve over the weekend. This strengthened dollar, combined with positive developments in the ceasefire agreement in the Middle East, contributed to a significant decline in gold prices. 

Gold prices broken below its uptrend channel suggest a trend reversal for the commodity. The RSi has declined while the MACD has crossed, and approaching the zero line from above suggests a bearish momentum is forming. 

Resistance level: 2055.00, 2080.00

Support level:2030.00,  2015.00

AUD/USD, H4

The Australian dollar faced headwinds from the strengthened U.S. dollar and encountered resistance around its approximate level of 0.6617. Recent inflation data indicated a potential easing in Australia’s inflation rate, leading market participants to speculate that the Reserve Bank of Australia (RBA) might maintain its current interest rate, thus impacting the strength of the Australian dollar.

The Aussie dollar was rejected at the strong resistance level of 0.6617 and is currently trading below its liquidity zone, giving a bearish bias signal for the pair. The RSI hovering near the oversold zone while the MACD diverges and moves lower, suggesting the bearish momentum is strong. 

Resistance level: 0.6510, 0.6617

Support level: 0.6390, 0.6300