Dollar Emerges as the Winner Out of the Confusing NFP

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American job figures came out very confusing. After some choppy trading, the market focuses on the bright side of the data and the dollar continues to rally.

Note: This was initially written at 14:15 GMT. I’ll update this post as events unfold.

Non-Farm Payrolls didn’t deliver a positive number. The US job market lost 20,000 jobs. The negative number was supposed to be the headline, but the Unemployment Rate stole the show with a drop from 10% to 9.7%.

This 0.3% drop in unemployment rate is significant. It’s also a return to the single-digit unemployment rate which is also meaningful in a psychological manner.

Forex market action

EUR/USD began by falling, and then turned up. The move stopped below the all-important 1.3750 line. EUR/USD fell below this important level many hours before the release of the NFP, and didn’t manage to regain this level since then.

The failure to rise back above this level means to me that the direction of EUR/USD is down. The dollar was strong throughout the week, and continues to be strong.

Also other currencies are losing ground to the dollar following the release.

In addition to the fresh data, last month drop was revised to the downside – a loss of 158,000 jobs instead of 85,000 that was initially reported. November’s gain in jobs was revised upwards once again – a gain of 64,000 jobs instead of 4,000 that was reported last month. More confusion..

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

10 Comments

  1. No need to be a genius to figure out that something is wrong with this data! It just doesn’t measure up as when the left hand doesn’t know what the right one is doing… The question is just which of the data is “faked” or can it be as simple as people have stopped to look for a new job? or a software “bug”?

    In any case it doesn’t match well with the reality when looking around and something certainly smell fishy in this recovery… The glourious sharade before the big fall? The American ego not being able to face the “let go” of the idea (fixation?) of a “strong Dollar”? And what is hiding behind the Chinese Wall?

  2. I love to see the market react to the NFP. They call it the Forex king for a reason :).

    Yoakim – These numbers will probably be revised and adjusted later on. Plus the NFP and the unemployment rate are not the same thing, otherwise there would be no point in having the two. Therefore it is only normal that they differ.

    Yohay – I have become a big fan of your webiste. Keep up the good work!

  3. Sure I understand they are 2 different things but still it doesn’t match up, jobs are lost and at the same time unemployment is improving… I mean it’s quite obvious the “improvements” doesn’t come from growth or other positive effect, still some big guys sticking out the nose and talk in ways as if that was the case. as if these figures was “real”.

    Of course the reality so far is that basically only the US market has reacted to this so far and it will be interesting to see asias reaction, if they will look through the smoke of this mixed bag as that’s what I think it is. Because if you remove smookey illution of improvment what’s left is, if not it at least close to a disaster. Then look in the back mirror for the past week or two and you have panic chasing you… I am sure someone had to trow that figure on the stack to prevent hell from breaking out.

    I believe too many are in a hurry to make money and “want” to see that see and paint that positive word of “recovey” and don’t want to see that this is far from over yet! It makes good ol BTO wisdom “Bbbbbaby yoyooo haven’t seen nothing yet”.

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