News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Bullish
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/IAwKQiZzaC
  • RT @FxWestwater: New Zealand Dollar May Fall Further as Stimulus-Driven Yield Climb Continues Link: https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2021/03/09/New-Zealand-Dollar-May-Fall-Further-as-Stimulus-Driven-Yield-Climb-Continues.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr https://t.co/6…
  • Wall Street Futures Update: Dow Jones (+0.43%) S&P 500 (+0.47%) Nasdaq 100 (+0.62%) [delayed] -BBG
  • #ASEAN FX appear in trouble vs #USD in the near-term amid rising Treasury yields (see link) My ASEAN-based USD index confirmed a break under key falling resistance from April Prices face the 200-day SMA, a break higher may open the door to more gains https://www.dailyfx.com/forex/fundamental/article/special_report/2021/03/08/US-Dollar-Outlook-Treasury-Yields-May-Continue-Pressuring-ASEAN-Emerging-Market-FX.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/JtYW6TfeZO
  • 🇯🇵 GDP Growth Rate QoQ Final (Q4) Actual: 2.8% Expected: 3% Previous: 5.3% https://www.dailyfx.com/economic-calendar#2021-03-08
  • 🇯🇵 GDP Growth Annualized Final (Q4) Actual: 11.7% Expected: 12.8% Previous: 22.9% https://www.dailyfx.com/economic-calendar#2021-03-08
  • Heads Up:🇨🇳 National People's Congress due at 00:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-03-09
  • Heads Up:🇯🇵 GDP Growth Rate QoQ Final (Q4) due at 23:50 GMT (15min) Expected: 3% Previous: 5.3% https://www.dailyfx.com/economic-calendar#2021-03-08
  • Heads Up:🇯🇵 GDP Growth Annualized Final (Q4) due at 23:50 GMT (15min) Expected: 12.8% Previous: 22.9% https://www.dailyfx.com/economic-calendar#2021-03-08
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/oRpRpLo55M
Solid Headline NFP Growth, but Internals Paint Mixed Picture; USD Whips

Solid Headline NFP Growth, but Internals Paint Mixed Picture; USD Whips

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- Headline jobs growth comes above +200K for the first time since September.

- US wage growth recedes to +2.5% y/y as Unemployment Rate increases to 4.8%.

- EUR/USD eases off as wage growth implies inflation pressures, reinvigorates Trump reflation trade.

Jobs growth in the United States increased to +227K in January, beating expectations of +175K, as the economy showed further signs of modest improvement in the first month of the Trump presidency. The December reading was revised only slightly to +157K from +156K; overall, however, the net-two month revision was -39K.

Other parts of the report painted a mixed picture of labor force strength. The labor force participation rate edged higher, up to 62.9%, which is part of why both the the unemployment rate (4.8% from 4.7%) and the underemployment rate (9.4% from 9.2%) rose slightly.

While today’s reading of +227K is on the high end of estimates, it’s important to keep in mind that the US economy doesn’t need such strength in the headline figure to maintain the unemployment rate at its current “full employment” level. According to the Atlanta Fed jobs calculator, the US economy needs to add +109K jobs per month over the next 12-months in order to keep the unemployment rate at 4.8%.

While this looks like another ‘Goldilocks’ report, wage growth – and implicitly, inflation pressures – softened. Annual wage growth came in at +2.5%, while the December figure was revised down to +2.8% (y/y). Previously, wage growth was at its highest level since June 2009. Such a development comes as a detriment to the US Dollar, as higher inflation expectations necessitate higher US yields, which have underpinned greenback strength.

As far as rate hikes are concerned, this report is a mixed bag; June 2017 and December 2017 remain the most likely periods for the Fed to raise rates this year. However, what may prove more important is the timeline of fiscal stimulus expectations: tax reform and infrastructure spending hopes have been the primary drivers of inflation expectations (and thus US yields); without them, the US Dollar remains vulnerable.

Here are the data driving the US Dollar this morning:

- USD Unemployment Rate (JAN): 4.8% from 4.7%, unch.

- USD Change in Nonfarm Payrolls(JAN): +227K versus +180K expected, from +157K (revised higher from +156K).

- USD Labor Force Participation Rate (JAN): 62.9% from 62.7%.

- USD Average Hourly Earnings (JAN): +2.5% versus +2.7% expected, from +2.8% (revised lower from +2.9%) (y/y).

See the DailyFX economic calendar for Friday, February 3, 2017

Chart 1: EUR/USD 1-minute Chart (February 3, 2017 Intraday)

Solid Headline NFP Growth, but Internals Paint Mixed Picture; USD Whips

Immediately following the data, the US Dollar set a fresh high versus the Euro (EUR/USD fell to 1.0709), but once the internals were digested, price quickly resolved to the upside. At the time this report was written, EUR/USD was trading at 1.0767, while the broader US Dollar Index (DXY) had fallen back below 100.

Read more: Preview for NFPs - Outlook for DXY, EUR/USD, and USD/JPY

Webinar Schedule for Week of February 5 to 10, 2017

Monday, 7:30 EST/12:30 GMT: FX Week Ahead: Strategy for Major Event Risk

Wednesday, 7:30 EST/12:30 GMT: Trading Q&A

Thursday, 7:30 EST/12:30 GMT: Central Bank Weekly

--- Written by Christopher Vecchio, Senior Currency Strategist

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES