Dollar Dives on Soft NFP Reading

• The dollar was dragged down by the poor NFP reading that was released last Friday.

• Eye on RBAs interest rate decision on tomorrow with the expectation to stand pat.

• Gold prices plummeted after they reached an all-time high due to strong profit-taking sentiment.

Market Summary

The dollar continued to face selling pressure after U.S. jobs data released last Friday showed significantly lower-than-expected numbers. While the unemployment rate aligned with market expectations at 4.1%, the Nonfarm Payroll came in at just 12,000—one of the lowest figures since the Fed began its tightening cycle. This has fueled expectations for a more accommodative Fed stance to support the job market, leading to a plunge in the dollar. Apart from the Fed's upcoming rate decision, traders are also focusing on the RBA and BoE monetary policy decisions due this week.

In the commodity market, gold faced strong profit-taking after hitting $2,790 for the first time. However, with both the U.S. presidential election and Feds rate decision set for this week, these events may continue to support gold's price. Oil prices jumped over 1% to start the week as OPEC+ decided to delay its planned production increase for December. Additionally, heightened geopolitical risks in the Middle East, including threats from Iran, could further boost oil prices.

In the crypto market, BTC dropped to $67,000 over the weekend, erasing gains from the previous week and wiping out over $200 million in the crypto derivatives market. Increased volatility is expected in the crypto space this week as market sentiment aligns closely with the U.S. election.

Current rate hike bets on 7th November Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (4.4%) VS -25 bps (95.6%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index slipped as US Nonfarm Payrolls saw minimal gains, marking the slowest increase since 2020. The Bureau of Labor Statistics reported only a 12,000-job increase, falling short of expectations and hinting at a cooling labor market. While the Unemployment Rate held steady at 4.1%, matching forecasts, temporary disruptions like recent hurricanes likely impacted hiring, albeit briefly. With the focus shifting to the upcoming US Presidential election, any substantial movement in the dollar is limited for now. Investors should monitor election developments closely for clearer dollar trend signals.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 36, suggesting the index might extend its losses since the RSI stays below the midline.

Resistance level: 104.20, 104.60

Support level: 103.85, 103.45

XAU/USD, H4

Gold prices stayed largely flat, with slight dips despite the subdued payroll data. The declines were primarily due to profit-taking and technical adjustments. Concerns about upcoming events, including the US election, continue to suggest potential volatility in the gold market. For further trend confirmation, investors should keep an eye on election results and subsequent impacts on market sentiment.

Gold prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 38, suggesting the commodity might experience technical correction since the RSI rebounded sharply from oversold territory.

Resistance level: 2755.00, 2785.00

Support level: 2735.00, 2715.00

GBP/USD，H4

The British Pound remains under pressure and could experience heightened volatility this week ahead of the Bank of England‘s interest rate decision on Thursday. While the pair is currently finding some support from the weakening dollar, it has yet to break through the 1.3000 psychological resistance level, indicating a bearish bias. Traders should monitor the BoE’s decision closely, as it could be pivotal for the Pounds direction.

GBP/USD surged from its recent low level but is facing strong selling pressure near the 1.3000 mark; a break above such a level may be a trend reversal signal for the pair. The RSI remains below the 50 level, while the MACD has yet to break above the zero line, suggesting that the pair remains trading with bearish momentum.

Resistance level: 1.3040, 1.3125

Support level: 1.2940, 1.2815