USD Strengthens On ADP Payrolls

2 May, 2019

The latest monthly private payrolls data from ADP/Moody’s Analytics showed that employers added 275k jobs in April. This beat estimates of a 181k increase. Numbers for March were revised higher to 151k.

However, ADP reports that most of the jobs were concentrated in the services sector. And there were job losses in the mining and quarrying sector. The ISM’s manufacturing PMI report saw activity falling to 52.8 from 55.3 in March.

Euro Weakens Amid a Quiet Trading Day

The euro was seen trading muted on Wednesday. Many European markets were closed on account of the May Day Bank Holiday. That being said, the common currency was rising earlier in the day in the run-up to the Fed meeting. However, the euro gave up the gains just after rising to a two-week high. Traders will be looking up to the final manufacturing PMI figures due later today.

EURUSD Biased to the Downside

The euro was briefly lifted on Wednesday as price test the resistance area of 1.1248 – 1.1226. Prices were rejected at this level as the euro settled lower on the day. The downside bias is likely to strengthen. The EURUSD could be seen extending the declines to retest the support at 1.1140 in the near term. Overall, price action could remain trading flat within these levels until there is a breakout.

Oil Weakens on Inventory Build Up

Crude oil prices were trading weaker on Wednesday. The US Energy Information Administration (EIA) weekly crude oil inventory report saw a buildup of 9.9 million barrels in the last week of April. This was higher than the forecasts of a 1.5 million estimate. The build in the EIA report comes after the API had, earlier this week, reported an increase in oil inventory.

WTI Holds on to the Support

WTI crude oil is testing the support level at 62.84 for the second time as price action settles into a range. The resistance level that was briefly tested at 64.55 is the likely upside target. A firm close near the 64.55 resistance level will confirm the resistance level, following which oil prices could break to the downside from the current range. A close below 64.55 will see crude oil extending towards the lower support at 60.33.

Gold Eases Gains as Fed Stays Neutral

Gold prices gave up the intraday gains following the FOMC meeting. The precious metal traded higher on the day but fell after the Fed left the interest rates unchanged. The central bank also maintained a neutral tone in its statement. This was in contrast to the general expectations that the Fed could start preparing the markets for a rate cut. Gold was down 0.5% on the day.

XAUUSD Likely to Trade Sideways

XAUUSD continues to trade within the range that is established. Price briefly tested the resistance area of 1285 yesterday before slipping back to the support formed at 1273. A daily close below 1273 support is required to confirm further downside in the precious metal. For the moment, the upside bias seems to be diminishing. A close below 1273 will potentially see the bearish trend resuming in gold.

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