The US job market gained 222K jobs in December. The unemployment rate was set at 8.5%. EUR/USD breaks below 1.2760. The really good news is that the “real unemployment rate”, U-6, dropped again, and now stands on 15.2%.
EUR/USD is dropping sharply. It seems that the markets were waiting for the NFP, but not awaiting a specific result, for another move lower. The pair is already at 1.2735. Some support is found at 1.2720.
The U-6 real unemployment rate also takes into account people who were too discouraged to look for a job.
Early expectations stood on around a gain of 150K, but the bar was raised following a strong report by ADP that showed a gain of 325K jobs in the private sector. The official figure for the private sector stood on a gain of 212K jobs.
The unemployment rate was expected to rise from 8.6% initially reported to 8.7%. Last month’s number was revised to 8.7%.
Jamie Coleman notes that the official 8.5% unemployment rate is the lowest since February 2008, just when Obama came into office.
Another thing Obama enjoys is the biggest annual job gain since 2006. The US gained 1.64 million jobs in 2011.
As always, it’s important to note revisions to previous releases. These added quite a bit in previous months. For a change, last month’s rise was revised to the downside, from +120K to +100K.
And as always, it’s important to remember that the unemployment rate is also a result of the level of participation in the workforce. The participation rate remained at 64%, after dropping last month to this level from 64.2%.
The employment component of the manufacturing PMI was quite upbeat, while the same component in the services sector still pointed to light contraction.
EUR/USD was under severe pressure prior to the release. European banks are struggling: Unicredit paid dearly for raising cash, there are rumors about trouble in Commerzbank and Deutsche Bank.
France is awaiting the downgrade which will automatically send the rating of the EFSF bailout fund down. Both raised money yesterday.
For more on the euro, see the euro/dollar forecast.Get the 5 most predictable currency pairs