Mixed jobs report in the US: the economy gained only 156K, but this came with an upwards revision. Wages jump 0.4% m/m, better than expected and no less than 2.9% y/y, the best in many years. The unemployment rate stands at 4.7%, as expected. Wages have the upper hand.
USD is up, but gains are limited. The greenback had a turbulent week but ends it with a sweet taste.
The rise in wages implies a more rapid pace of interest rate hikes by the Federal Reserve. This is driving the dollar.
The US was expected to report a gain of around 178K jobs in December, mimicking the advance seen in November. The unemployment rate carried expectations for a bounce to 4.7% and wages were projected to rise by 0.3% after sliding last time.
The US dollar remained on the defensive ahead of the publication. Here are 3 reasons for the USD crash.
December NFP Data (updated)
- Non-Farm Payrolls: 156K (exp. +175K, last 161K before revisions)
- Average Hourly Earnings -0.4% m/m, 2.9% y/y (exp. +0.3% m/m, last month -0.1% m/m, 2.5% y/y)
- Revisions: +19K(-2K last time).
- Participation Rate: 62.7% (62.7% last month )
- Unemployment Rate: 4.7% (exp.4.7%, last month 4.6%)
- Private Sector: 144K (ADP showed 153K).
- Real Unemployment Rate (U-6): 9.2% (previous: 9.3%).
- Employment to population ratio: 59.7% (previous: 59.7%)
- Average workweek: 34.3 (last month: 34.4).
More in the official publication. US trade balance, a separate report, was expected to sow a deficit of 42.2 billion dollars, similar to previous figures. The actual figure is -45.2 billion.
NFP Currency Reaction
- EUR/USD traded around 1.06, riding on the USD weakness. The pair dropped to 1.0545 but bounced from there.
- GBP/USD was around 1.24, enjoying good PMIs in the UK. 1.2330 is the low, but the pair recovers.
- USD/JPY was around 116 as the dollar was on the back foot. Dollar/yen jumped to 116.43, and settles above 116.
- USD/CAD traded around 1.3250. Note that Canada published its own jobs report at the same time. Dollar/CAD drops all the way to 1.3183, but this is thanks to a superb jobs report from Canada.
- AUD/USD bounced to around 0.7350. Chinese data was encouraging earlier in the week. The Aussie slides to 0.7330.
- NZD/USD topped 0.70 and is struggling to hold on to this level after the release.
The preview: trading the NFP with EUR/USD
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