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A bitter  disappointment from the US jobs report: only 142K jobs gained. In addition, the revisions are to the downside, to 136K.  Wages remained unchanged. It’s all negative. The  unemployment rate remains 5.1%. Participation is at 62.4%. Y/y wages are at 2.2% unchanged.  

USD is  sold very heavily as this is a terrible report almost on all fronts. EUR/USD jumps  over 100 pips. .

The US was expected to report a gain of 203K jobs in September, an unemployment rate of 5.1% and average hourly earnings of +0.2% m/m, 2.2% y/y.

The US dollar was slightly stronger towards the release.

Data (updated)

  • Non-Farm Payrolls:  142K  (exp. +203K, previously 173K  before revisions)
  • Participation Rate: 62.4% – new low since the 70s(62.6% last month )
  • Unemployment Rate: 5.1%  (exp.5.1%,  last month 5.1% before revisions)
  • Revisions: -59K terrible – August is now only 136K and July 223K(+43K last month)
  • Average Hourly Earnings: 0.0% m/m, 2.2%  (exp. +0.2% m/m, last month 0.3% m/m, 2.2% y/y)
  • Private Sector: 118K  (ADP showed only +200K).
  • Real Unemployment Rate (U-6): 10%  (previous: 10.3%).
  • Employment to population ratio: 59.2%  (previous: 59.4%)
  • Average  workweek: 34.5 – also disappointing  (last month: 34.6).

Analysis and currency reaction (updated)

It’s important to note that the euro and the yen make big gains, GBP makes smaller ones and commodity currencies are  back to square one

More:  EUR/USD tests triangle top on nightmare NFP

AUD/USD unable to ride the nightmare NFP – slides towards 0.70

  • EUR/USD traded around 1.1160, looking lower, perhaps also due to euro-zone deflation. It reaches above 1.1270 afterwards.
  • GBP/USD traded around 1.5160, above the lowest levels, thanks to better construction PMI.  Cable is hitting 1.52.
  • USD/JPY traded around  120.20, still hugging 120. The pair is down to 119.30.
  • USD/CAD  traded around 1.3240. The pair is at 1.32 – bad news for the US is bad news for Canada.
  • AUD/USD  was at 0.7030, above the 0.70 magnet. It advances a bit to 0.7044.
  • NZD/USD  was around  0.6410. 0.6444 is the new level. Not the best day for risk currencies.

Background

Yesterday’s weak manufacturing PMI weighed on expectations a little, but basically as we don’t have the ISM Non-Manufacturing PMI (services) we have less clues, but markets are looking for a rise in wages.

We have a Fed meeting at the end of October but markets seem to dismiss it for now. The bigger event is December, when rates are expected to rise.

The preview:  EUR/USD: Trading the US Non-Farm Payrolls