Upbeat Job Data Boost U.S. Dollar

• The U.S. dollar spurred by upbeat Nonfarm Payroll and Unemployment rate.

• Wall Street hammered by upbeat U.S. economic indicators.

• Gold Prices notching $2700 mark ahead of Trumps return.

Market Summary

The U.S. Nonfarm Payrolls report last Friday exceeded expectations at 256k, with unemployment improving to 4.1%. These data points reinforced expectations that the Fed may adopt a more cautious stance while extending its rate cut path, providing strength to the U.S. dollar. However, Wall Street faced significant losses, with all three major indices plunging to new lows, reflecting investor concerns about the impact of prolonged high interest rates.

Gold prices rallied toward the $2,700 mark as demand for the safe-haven asset rose due to uncertainties surrounding Trumps administration and geopolitical developments in the Middle East and Eastern Europe, which could further fuel the precious metal's prices. Oil also saw a sharp rally, climbing to a four-month high as U.S. sanctions on Russian crude supported bullish momentum. In contrast, BTC and ETH prices remained subdued amid a lack of catalysts, reflecting broader risk-off sentiment in the crypto market.

Current rate hike bets on 29th January Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (93.1%) VS -25 bps (6.9%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index extended its gains following a stronger-than-expected US jobs report, with Nonfarm Payrolls rising to 256K (vs. 164K expected) and unemployment dropping to 4.10% (vs. 4.20% expected). The upbeat data fueled expectations that the Federal Reserve may keep interest rates elevated, driving Treasury yields to their highest levels in 2023. This reinforced the dollar's strength as investors adjusted their monetary policy outlook.

The Dollar Index is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 71, suggesting the index might experience technical correction since the RSI might enter overbought territory.

Resistance level: 109.90, 111.60

Support level: 107.65, 105.75

XAU/USD, H4

Gold initially dipped following the strong US jobs data but quickly regained ground, driven by safe-haven demand amid growing trade and geopolitical uncertainties. Despite the positive employment figures, gold's resilience remains intact as investors seek protection from potential risks. If gold holds above the 2670.00 support level, it may continue to attract safe-haven buying, particularly amid ongoing global tensions.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated increasing bearish momentum, while RSI is at 55, suggesting the commodity might experience technical correction since the RSI retreated from overbought territory.

Resistance level: 2690.00, 2720.00

Support level: 2665.00, 2635.00

CL OIL, H4

Oil prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum. However, RSI is t 74, suggesting the commodity might enter overbought territory.

Resistance level: 78.00, 83.75

Support level: 72.95, 66.85