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US Dollar Soars as Solid Jobs Report Underscores Less-Dovish Fed

US Dollar Soars as Solid Jobs Report Underscores Less-Dovish Fed

Rich Dvorak, Analyst

US DOLLAR OUTLOOK: USD PRICES SURGE AFTER JOBS REPORT SMASHES EXPECTATIONS

  • The US Dollar is surging in response to the latest NFP report which revealed the US economy added 266K jobs in November and smashed estimates looking for a gain of 180K jobs
  • USD price action could continue to rise as a robust US labor market reiterates the Fed’s relatively less-dovish stance on monetary policy
  • Enhance your market knowledge with our free Forecasts & Trading Guides available for download

The US Dollar is starting to claw back recent downside with the DXY Index popping 0.35% higher from intraday lows after a better-than-expected data print for November nonfarm payrolls (NFP) just crossed the wires.

The November US jobs report detailed 266K job additions for the headline change in nonfarm payrolls figure, which is the strongest reading since January and shattered the median economist estimate of 180K.

CHART OF MONTHLY CHANGE IN US NONFARM PAYROLLS (NFP)

Chart of Monthly Change in Nonfarm Payrolls NFP Report

According to the Atlanta Fed jobs calculator, the monthly change in employment needs to average 93K job additions over the next 12-months to keep the target unemployment rate in-line with FOMC projections listed at 3.7% for 2020.

Correspondingly, the DXY US Dollar Index is skyrocketing from its lowest level since November 04 as the solid jobs report likely reiterates the recent shift in monetary policy outlook by the Federal Reserve from dovish to neutral.

The US Dollar nevertheless faces downward pressure as US-China trade deal optimism runs rampant and fuels broader market risk appetite – a bearish headwind for the Greenback considering its posturing as a safe-haven currency. Another factor that might keep the US Dollar bogged down could be the Fed’s ballooning balance sheet.

US DOLLAR INDEX PRICE CHART: 30-MINUTE TIME FRAME (DECEMBER 03, 2019 TO DECEMBER 06, 2019)

US Dollar Chart DXY Index Price Response to Jobs Report November 2019

Chart created by @RichDvorakFX with TradingView

Looking forward, USD price action has potential to continue its ascent if the upcoming Fed rate review due next Wednesday at 19:00 GMT confirms the central bank’s relatively more hawkish stance on interest rates.

FOMC officials are also expected to provide an update to its economic projections, though this will be preceded by an inflation report earlier in the day slated for 13:30 GMT. The release of US retail sales for November will top off next week’s jam-packed economic calendar with the indicator scheduled for release December 13 at 13:30 GMT.

Read more: US Dollar Outlook Fixated on Trade Talks, Jobs & Fed Decision

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

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