Bearish Engulfing in EURUSD Despite Low NFP, ISM Manufacturing

EURUSD retraced 1.5 cents higher this week, climbing above 1.09, but made a big bearing reversal late on Friday, despite the miss in US data for October. The NFP employment dived to just 12K new jobs, although that comes during the hurricane and the strike, which has skewed the numbers a lot.

EUR/USD Chart Daily – The Retrace Higher Is Over

EUR/USD pushed above the 100 daily SMA (red) after the soft US data, climbing several points above 1.09 as well, but buyers couldn’t hold the gains up there and we saw a bearish reversal later on. The forex pair dived 80pips lower to 1.0830, forming a bullish engulfing pattern on the daily chart. Now the retrace is over as the stochastic indicator shows, so the bearish trend will likely resume next week.

US ISM manufacturing for October 2024

Despite the recent drop in fuel prices, the rise in input costs could potentially attract the Fed’s attention, signaling a dovish note for monetary policy. This month’s “Prices Paid” figure, which hit its highest since May, follows the year’s lowest reading but still points to increasing cost pressures in the manufacturing sector. The October ISM Manufacturing PMI registered at 46.5, below the anticipated 47.6, signaling an ongoing contraction in manufacturing with little indication of a quick recovery.

US October Non-Farm Payrolls and Employment Report

• Non-Farm Payrolls: +12K vs. +113K expected
  • Prior month revised down to +223K from +254K
  • Two-month net revision: -112K
• Unemployment Rate: 4.1%, with unrounded rate rising to 4.145% (from 4.051%)
• Labor Force Participation Rate: 62.6% vs. prior 62.7%
• Private Payrolls: +12K (prior revised to +223K)
• U6 Underemployment Rate: Unchanged at 7.7%

Wages and Work Hours:

• Average Hourly Earnings (M/M): +0.4%, unchanged from prior
• Average Hourly Earnings (Y/Y): 4.0%, unchanged
• Average Weekly Hours: 34.3, consistent with prior reading

Sector-Specific Employment:

• Manufacturing Payrolls: -46K vs. prior -7K, indicating further declines
• Government Jobs: +40K vs. prior +31K
• Full-Time Jobs: Decreased by 164K vs. a prior increase of 631K
• Part-Time Jobs: Declined by 227K, following a -201K in the previous month

This challenging backdrop in manufacturing is mirrored by softer-than-expected job growth: non-farm payrolls rose by only 12K in October, well below the 113K forecast, while the unemployment rate remained steady at 4.1%. Additionally, the labor participation rate showed a slight decline, highlighting a cooling trend in the labor market.

EUR/USD Live Chart