Non-Farm Payrolls amazes with +321K – USD leaps

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An absolutely superb report: +321K jobs gained in November. Revisions add 44K. Also wages are finally up: 0.4% m/m and 2.1% y/y. This is good news. The unemployment rate stays at 5.8%. This is the biggest jobs gain since 2012. Could we see a rate hike in March?

USD is gaining with EUR/USD losing 1.23 and USD/JPY above 121.

The US was expected to gain 231K non-farm jobs in November after 214K in October (before revisions). The unemployment rate was expected to remain unchanged at 5.8%. Average hourly earnings carried expectations of +0.2% m/m and the last y/y rise was 2%. The dollar was showing strength before the publication.

Data (updated)

  • Non-Farm Payrolls:  321K (exp. +231K, October saw 214K before revisions)
  • Participation Rate: 62.8% (62.8% last month )
  • Unemployment Rate: 5.8% (exp.5.8%, last month 5.8% before revisions)
  • Revisions:  +44K it’s now 271K in September and 243K in October:   (+31K last month)
  • Average Hourly Earnings: +0.4% m/m, 2.1% y/y (exp. +0.2%, last month 0.1% m/m, 2% y/y)
  • Private Sector: +314K (ADP showed a gain of +208K jobs).
  • Real Unemployment Rate (U-6): 11.4% (previous: 11.5%).
  • Employment to population ratio: 59.2% (previous: 59.2%)
  • Average workweek: 34.6 (last month: 34.6).

More data: The US trade balance deficit grew to 43.4 billion.

Analysis and currency reaction (updated)

More: EUR/USD hit by one-two punch – creates double bottom

And even more: Fresh wave of USD storm: breakouts in EUR, GBP, JPY, CAD, AUD

  • EUR/USD traded under the 1.2360 line, still digesting Draghi’s pause before a potential QE move. EUR/USD is now at 1.12280, testing the lows seen yesterday.
  • GBP/USD in range under 1.57 and moves down to 1.5635.
  • USD/JPY traded high in the sky well above 120. See USDJPY Elliott Wave analysis. A big leap here: Dollar/yen at 121.20.
  • USD/CAD traded around 1.14. Note that also Canada publishes its jobs report at the same time. The pair is above 1.14, also due to a weak Canadian jobs report.
  • AUD/USD was trading at the lows of 0.8365, still hit by the disappointing Australian growth. AUD/USD is at a new 4 year low at 0.8323.
  • NZD/USD traded around 0.7750 and at 0.7720 afterwards.

Quick analysis

In one word: WOW. In a few more words:

  • This is a good report on all accounts: a big gain in jobs, a slip in the real unemployment rate and finally a wage bump.
  • The wage bump could still be a one off. Another rise could certainly increase the chance of a rate hike in March. The words “considerable time” regarding a rate hike will most certainly be scrutinized very carefully in the next FOMC statement on December 17th.
  • Another positive point: the number of people unable to work because of weather: 153K when the normal for November is 73K.

Background

While PMIs came out better than expected, the employment components weren’t only OK, pointing to ongoing steady growth in jobs but nothing extraordinary. The weak ADP may have pushed expectations a bit lower, but probably not too much.

This jobs report precedes the FOMC decision that is released on December 17th. It will be the first decision after QE ended and the focus is on the timing of the liftoff: the first rate hike. A lot depends on this report.

The dollar has certainly been on a roll across the board, with specific strength against the yen and the euro. Here is the preview: trading the NFP with EUR/USD.

In our latest podcast, we preview December’s big events, talk about the importance of jobless claims, the crash in oil prices and GOFO going negative:

Download it directly here.

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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 the 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.

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