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Weak US Non-farm Payrolls Propels Dollar Plummet

Weak US Non-farm Payrolls Propels Dollar Plummet

Kevin Jin,

THE TAKEAWAY: US Non-farm Payroll come in much weaker than expected at +162K > GBPUSD rallies up to $1.5300

US Non-farm Payroll numbers came in significantly weaker than expected: +162K July actual; +185K Bloomberg News survey expected; +188K prior (revised down from +195K). Many investors had optimistic hopes for this data print due to the recent labor market strength and the last two beats in NFP data. The miss and downward revision for June’s figures immediately sent the USD lower. The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) falls -50 (-0.45%) to $10833 at the time of writing.

The reverberating effects of the weak labor data was strong reflected in bonds. 10YR US treasury yields declined -8.1bps (-2.99%) to 2.625% at the time of writing.

The US unemployment rate did tick down to 7.4% versus last month’s 7.6%. However this seemingly positive news can be partially explained by the decline in participation rate from 63.4% versus June’s 63.5%. The NFP data will not be judged as the standalone indicator of labor market strength. However, today’s data does provide a dove argument heading into the September Fed meeting.

AUDUSD 15-minute Chart: August 2, 2013

Weak_US_Non-farm_Payrolls_Propels_Dollar_Plummet_body_Picture_4.png, Weak US Non-farm Payrolls Propels Dollar Plummet

Charts Created using Marketscopeprepared by Kevin Jin

The AUDUSD is modestly lower by -0.19% at the time of writing. There was strong volatility, marked by rapid 50 pip swings immediately following US NFP data. The pair ends up ultimately lower today, inching towards $0.8900 at the time of writing.

GBPUSD 15-minute Chart: August 2, 2013

Weak_US_Non-farm_Payrolls_Propels_Dollar_Plummet_body_Picture_3.png, Weak US Non-farm Payrolls Propels Dollar Plummet

Charts Created using Marketscopeprepared by Kevin Jin

The GBPUSD is one of the strongest performing major FX pairs today, up +1.00% at the time of writing. The cable immediately surged over +100 pips following the release and trades just off of $1.5300 at the time of writing. The pair was last above 1.5300 on July 30.

EURUSD 15-minute Chart: August 2, 2013

Weak_US_Non-farm_Payrolls_Propels_Dollar_Plummet_body_Picture_2.png, Weak US Non-farm Payrolls Propels Dollar Plummet

Charts Created using Marketscopeprepared by Kevin Jin

The EURUSD is modestly stronger by +0.46% at the time of writing. The EURUSD jumped about +70 pips immediately following the NFP report. The pair continued to trade higher before meeting resistance at $1.3300 near London Close.

USDJPY 15-minute Chart: August 2, 2013

Weak_US_Non-farm_Payrolls_Propels_Dollar_Plummet_body_Picture_1.png, Weak US Non-farm Payrolls Propels Dollar Plummet

Charts Created using Marketscopeprepared by Kevin Jin

The USDJPY is moderately lower by -0.53% at the time of writing. The pair declined about -90 pips immediately after NFP release and continued to move lower below ¥99.00. The pair is mostly hovering around 99.00 through London Close.

--- Written by Kevin Jin, DailyFX Research

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