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It finally happened – the American job market gained 162,000 jobs in March. The highest gain in 3 years sends the dollar higher across the board. Not all currencies affected equally. NFP Analysis.

Non-Farm Payrolls rose by 162K. This is the first time that the Department of Labor reports a rise in jobs in the month that just ended. There was a gain in jobs in November 2009, but this was seen only in a revision that came later – not in the initial report.

Early expectations stood a rise of 180K, or on a media of 200K according to Reuters. So, this seems like a disappointing result. Indeed, the initial response was somewhat hesitant. But two factors helped the dollar rise:

Despite the small miss, this is still the biggest gain in jobs in three years. This is really great news. The unemployment rate remained unchanged at 9.7%, as expected.

The second reason for the dollar’s strength is that the rise in jobs doesn’t solely lean on the government – the 2010 decennial census is only a small portion of gains – the private sector added 123,000 jobs – the highest since May 2007. This shows that the rise is real and strong, and also that the ADP Non-Farm Payrolls announced earlier in the week were totally wrong.

Forex reaction

On thin volume, due to Good Friday, EUR/USD fell below 1.,35, GBP/USD fell below 1.52, and USD/JPY broke the resistance line and made a leap to 94.50. Note that the good Non-Farm Payrolls helped GBP/JPY that touched 144.

But not all currencies are equal: the Aussie reacted in a more mild way. USD/CAD stood out with a fall – the pair dipped below 1.01 – the Canadian dollar showed its strength once again.

This strength of the loonie on the backdrop of the NFP signals that USD/CAD may reach parity next week, on Canadian employment figures.

— This post will be updated as the market continues to move on the NFP —

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