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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