US Dollar Contained After Large NFP Miss, Fed Outlook Unchanged

NFP Analysis and Talking Points

• US Nonfarm Payrolls rose by 20k in February, missing expectations of 180k expected; Prior month revised Higher
• US Average Hourly Earnings on the month beats consensus

US Bureau of Labor Statistics reported total nonfarm payroll (NFP) employment expanded by a soft 20k jobs in February, missing expectations of 180k. Alongside this, the headline figure for the prior month saw slight upward revision to 311k from 304k. However, the unemployment rate surprising dipped 0.2ppts to 3.8%, better than the expected 3.9%. More importantly for the Fed, wage growth yet again picked up with the yearly rate at 3.4% (Exp. 3.3%) after a monthly increase of 0.4%. As such, while the Fed continue to suggest that inflation pressures remain muted. Recent increases in wage growth are beginning to suggest otherwise. While the USD had initially dropped on the soft headline, this had been offset by the better than expected wage growth and unemployment figures. Overall, this report is relatively mixed, with the significant drop in the headline partly explaned by transitory factors (weather). Alongside this, today's report is unlikely to be a game changer for the Fed outlook given that monetary policy will be on hold for the foreseeable future, thus the market reaction had been somewhat contained. --- Written by Justin McQueen, Market AnalystTo contact Justin, email him at Justin.mcqueen@ig.com Follow Justin on Twitter @JMcQueenFX

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