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US Dollar Whipsaws on Soft Non-Farm Payrolls Report

US Dollar Whipsaws on Soft Non-Farm Payrolls Report

Justin McQueen, Strategist

US Dollar Analysis & News

  • US NFP Softer Than Expected, USD Whipsaws
  • Data Reaffirms Need for COVID Relief
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US NFP Softer Than Expected, USD Whipsaws

US NFP headline at 245k, notably missing expectations of 460k, while the prior reading had been revised lower to 610k from 638k. Elsewhere, the unemployment rate dipped to 6.7%, although, this is likely due to the 0.2ppt drop in the participation rate. The initial market reaction has been choppy with the USD dipping ever so slightly before retracing, while the S&P 500 had whipsawed.

Data Reaffirms Need for COVID Relief

Heading into the release, market participants had been gearing up for a softer reading, given the recent soft run of labour market data. This was particularly evident in the ISM Manufacturing PMI, which saw the employment subcomponent fall back into contraction territory. To that end, the data largely reaffirms the case that the Fed will remain accommodative with expectations that the Fed will tinker its weighted average maturity of bond purchases at the upcoming meeting. Alongside this, the reading will also see calls grow louder for the need of further COVID relief, which in turn has seen US yields jump to session highs.

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US Dollar Whipsaws on Soft Non-Farm Payrolls Report

USD vs US 10Y Yield

US Dollar Whipsaws on Soft Non-Farm Payrolls Report

Source: Refinitiv

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