Dollar Buoyant as US Jobs Growth Tops +200K for 11 Straight Months
- US Nonfarm Payrolls beat expectations mildly at +252K.
- US unemployment rate ticks lowers to 5.6% despite participation rate falling.
- EURUSD falls back to $1.1761 as report mostly positive.
The US Nonfarm Payrolls headline reading fell to +252K for December, a strong figure, although somewhat disappointing relative to the blowout +353K figure seen in November. Overall, the headline numbers were strong: the actual beat estiamtions by +12K; the prior was revised higher by +32K; and the unemployment rate sunk to its lowest level since June 2008.
Wage data was actually the most discouraging aspect of this report, insofar as real wage growth has fallen, another sign that inflation pressures are abating. The magnitude of this matter is an entirely different issue in context of recent market developments: the strong US Dollar in the second half of 2014, coupled with a near 50% drop in oil prices (by December), as helped bolster purchasing power for the US consumer.
The Fed has stated its desire to see wage growth accelerate before it tightens policy; but it was also made clear in the December minutes this week that rate hikes could occur even if inflation is floundering. For now, as the Fed doesn’t consider the drop in inflation anything more than transitory, it’s unlikely that the wage figures ruffle too many feathers, at least for the US Dollar.
Here’s a summary of the data this morning that’s responsible for US Dollar price action:
- USD Change in Nonfarm Payrolls (DEC): +252K versus +240K expected, from +353K (revised higher from +321K).
- USD Change in Private Payrolls (DEC): +240K versus +228K expected, from +345K (revised higher from +341K).
- USD Unemployment Rate (DEC): 5.6% versus 5.8% expected unch.
EURUSD 1-minute Chart: January 9, 2015 Intraday
Charts Created using Marketscope – prepared by Tyler Amend
EURUSD rallied to a high of $1.1831 ahead of the report before retracing all of its gains and moving back towards the weekly lows. Price bottomed out at $1.1761 in the 30-minutes after the report. USD strength has been widespread in the wake of the report, although gains have been trimmed: EURUSD last traded at $1.1788 at the time this report was written.
--- Written by Christopher Vecchio, Currency Strategist
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