USD Choppy on Hurricane Impacted NFP, Unemployment Lowest Since 1969

NFP Analysis and Talking Points

• US Nonfarm Payrolls rose by 134k in September, beating expectations of 185k expected; Prior month revised higher.
• US Average Hourly Earnings in line
• US Unemployment Rate drops to lowest level since 1969

See our latest Q4 FX forecast to learn what will drive the currency through the quarter.

NFP Report Review

US Bureau of Labor Statistics reported total nonfarm payroll (NFP) employment expanded by a 134k jobs in September, disappointing expectations of 185k amid the impact from Hurricane Florence. However, the headline figure saw sizeable upward revision to 270k from 201k, while the 2-month net revision had been +87k. The unemployment rate potentially steals the limelight with a drop to 3.7%, reaching the lowest level since 1969, which will be to the delight of Fed officials given that the see NAIRU at 4.5%.

Wage Growth In-Line, Revision Lower

History suggested that last month’s 0.4% average hourly earnings figure would imply a fall for the subsequent month and indeed that was the case with a reading of 0.3%. However, a slight surprise had been the revision lower for the previous month to 0.3% from 0.4%, consequently this may keep inflation concerns at bay for now. Overall, the jobs report does not change the outlook for the Fed this year with a December hike largely a done deal.

Market Response

A choppy reaction seen in the USD following a relatively mixed report. Supportive factors for the US Dollar had been the drop in the unemployment rate (Lowest since Dec 1969), alongside this, there had been a notable revision to the headline. Slightly disappointing factors had been the Fed focussed wage data in which the monthly figure saw a revision lower to 0.3% from 0.4%.

DXY Price Chart 1: 1-minute time frame (Intra-day)

Chart by IG

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

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