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Non-farm Payrolls showed a a gain of 103K jobs in September. Early expectations were for a gain of around 50K. The unemployment rate remained unchanged at 9.1%, as expected.

The initial reaction is of a weaker dollar on risk appetite. EUR/USD was trading around 1.3450 before the release and is now aiming for 1.35. The dollar is falling against all currencies except the Japanese yen. Classic risk rally that continues previous action this week. This is the initial reaction and things might still change.

The data

A very nice gain of 137K was reported for the private sector. This is significantly better than the ADP report. As expected, government layoffs weighed on the final figure, with a total of 34K.

Average Hourly Earnings rose by 0.2% as expected. At last some good news. Will the US avoid recession?

Another piece of good news came from the revision of last month’s figure. Instead of zero change, the updated report points to a gain of 57K. This is quite a big revision, and it has a lot to do with the strike in Verizon.

On the other hand, the “real unemployment rate”, also known as U-6, climbed from 16.2% to 16.5%. This figure, available here, includes people that are too desperate and discouraged to look for a job. 16.5% is quite depressing.

Currency movements

EUR/USD managed to top 1.35. Next minor resistance: 1.3550. GBP/USD continues its strong recovery and almost reached 1.56 before retreating. The Swiss franc is now a risk currency, and it strengthens against the dollar as well.

The only safe haven, the Japanese yen, is falling against the dollar. USD/JPY is in sight.

The Canadian dollar is enjoying a very strong rally, with USD/CAD at around 1.0250. The move began with the superb job figures in Canada, which provided some kind of hint about the US. Canada is very dependent on the US.

AUD/USD also broke higher above the recent uptrend channel, trading at 0.9850 at the moment. NZD/USD leaped to 0.7770, in a similar pattern to the Aussie.

Update: The dollar recovers some of its losses after the first move.

Background

The signs leading towards this event were mixed: ADP Non-Farm Payrolls showed a nice gain in the private sector, but a similar gain last month wasn’t matched by the official number. Manufacturing PMI, including the important employment component, came out better than expected,

Weekly jobless claims ticked lower during the month, providing hope, especially for the unemployment rate. But on the other hand, America’s largest sector, the services sector, has seen a dive in the employment component in the PMI – it swung from growth to contraction, casting a shadow on this release.

EUR/USD was trading at a narrow range between 1.34 and 1.3450 before the release, consolidating gains. 1.35 and 1.3550 are resistance lines, 1.3360 and 1.3285 provide support. For more on the euro, see the EUR/USD forecast.

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