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The US job market gained only 96K jobs in August. Official early expectations stood on a gain of around 125K, but expectations rose after positive US figures were released in the last days leading to the event. The unemployment rate stands at 8.1%, better than 8.3% initially expected. This is due to a drop in the participation rate. The weak job gains, especially after the good data, is very disappointing.

EUR/USD traded on high ground towards the release: around 1.27 and is now on the rise. Update: EUR/USD cannot break 1.2740 and retreats. USD/JPY was sliding under the high line of 79 before the release and is now plunging towards 78.50.

More data:

  • A significant downwards revision of 22K jobs for July: only 141K now.
  • Average hourly earning flat instead of +0.2%.
  • Real unemployment rate, U-6, falls from 15% to 14.7%.
  • Participation rate dropped to 63.5% – this explains the drop in the unemployment rate.
  • Employment to population ratio: 58.3%.

EUR/USD clearly capped by 1.2740 – update – this was only temporary. The pair now trades at 1.2770.  USD/CAD fell below support at 0.98, also enjoying a great Canadian jobs report released at the same time.

Fresh  analysis: Weak Non-Farm Payrolls Not Enough for QE3.

Technical view: EUR/USD Breaks resistance, highest since May

This Non-Farm Payrolls release is critical for the next FOMC meeting on September 12-13th. Bernanke’s comments about the grave situation of employment took a part in raising expectations for more dollar printing.

It’s important to state that the Fed also has the option to extend the low rate guidance from late 2014 to 2015. This would be a compromise between hawks and doves.