THE TAKEAWAY: USD Change in Nonfarm Payrolls (DEC) > +155K versus +152K expected, from +161K (revised from +146K) > USD Unemployment Rate (DEC) > 7.8% versus 7.7% expected, from 7.8% (revised from 7.7%) > USDJPY BEARISH
Yesterday’s ADP Employment Change report for December was nothing more than a red herring, with the official government labor market reading showing a more modest improvement in labor market conditions at the end of the year. Nonfarm Payrolls increased by +155K in December, slightly above the +152K consensus forecast compiled by Bloomberg News. However, the November print was revised higher to +161K, representing a +15K change. Furthermore, the Unemployment Rate was revised higher to 7.8% in November and held there in December, on the back of slightly stronger participation numbers.
These figures don’t fit in with the sentiment that brewed yesterday that the Federal Reserve would reduce its stimulus efforts in 2013; this hardly fits in with the idea of a strong recovery. In fact, some quick math shows that if the US economy were to continue to add jobs at its current pace, it would not recover all of the jobs it lost during the recession until after 2025.
USD/JPY 1-minute Chart: January 4, 2013
Charts Created using Marketscope – Prepared by Christopher Vecchio
Following the release, the USDJPY fell back from its daily highs near 88.40 to as low as 87.80, at the time this report was written. US Dollar weakness was prevalent all around, with the EURUSD, AUDUSD, and NZDUSD all rallying. It should also be noted that the USDCAD fell quite substantially, boosted by a strong Canadian employment report for December.
--- Written by Christopher Vecchio, Currency Analyst
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