US Non-Farm Payrolls printed at 88K slightly below the already muted
expectations of 100K as US economy displayed clear evidence of deceleration.
Every component of the report was worse than forecast with Average Hourly
earnings growing only 3.7% vs. 3.9% consensus and manufacturing payrolls
shrinking yet another -19K vs. -14K forecast. Furthermore, the months prior data
was revised downward for the second consecutive month.
Despite the less than impressive US results, the EURUSD was unable to
muster much of a rally. As we have noted before, the currency pair was
grossly overbought and traders needed to see recessionary-like numbers from the
US employment report in order to propel the euro higher.
The present situation leaves the market at a standstill, as neither
EZ data nor the US data have providing unequivocally clear
signals this week and range bound conditions are likely to
persist. Trading in the EURUSD today may also be cautious ahead
of the French presidential election this weekend, as traders may choose
to clear the small political risk of a Sarkozy loss
before attempting any further euro longs.
Nevertheless, today's news offers no help to dollar bulls as it clearly
shows an economy in a slowdown and any bounce that the greenback may enjoy
will be strictly a function of technical rather than fundamental factors.
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