The U.S. economy added 142,000 jobs in September, when more than 200,000 were forecasted. The August numbers were revised as expected but investors got a shock as the number was lower as the upward revisions did not materialize. The unemployment rate remained at 5.1 percent, but the pressure on the Federal Reserve to raise rates will have diminish after the disappointing October jobs report.
The USD is trading lower against all pairs. Economists were forecasting over 200,000 gains in September and upward revisions to the August numbers of 40,000. The market exhibits a bias to react to negative results than to reward the USD with positive outcomes above the forecast. The Federal Reserve is trying to make the right call by delaying the interest rate hike until it can witness the right conditions for the U.S. economy. The real problem is the Fed has already committed to a rate hike in 2015, which in itself was hawkish from the central bank, but has so far failed to give any real guidance on when it will happen. The uncertainty surrounding the timing of the hike has increased market volatility and contradictory statements from Fed members are not helping. A weak NFP might be enough to push the American benchmark rate hike until 2016, even though an above expectations one could not have guaranteed one before the end of the year.
The miss on the strongest pillar of the U.S. recovery might prove to be a mirage as September revisions tend to be higher than average, but for now the USD is on the back foot across the board. The chink in the employment armor could cause other central banks to act as the Federal Reserve is more likely to wait. That put further pressure on the Bank of Japan and the European Central Bank. The BoJ is expected to add to its record stimulus program next week.
The USD is trading lower against all pairs. Economists were forecasting over 200,000 gains in September and upward revisions to the August numbers of 40,000. The market exhibits a bias to react to negative results than to reward the USD with positive outcomes above the forecast. The Federal Reserve is trying to make the right call by delaying the interest rate hike until it can witness the right conditions for the U.S. economy. The real problem is the Fed has already committed to a rate hike in 2015, which in itself was hawkish from the central bank, but has so far failed to give any real guidance on when it will happen. The uncertainty surrounding the timing of the hike has increased market volatility and contradictory statements from Fed members are not helping. A weak NFP might be enough to push the American benchmark rate hike until 2016, even though an above expectations one could not have guaranteed one before the end of the year.
The miss on the strongest pillar of the U.S. recovery might prove to be a mirage as September revisions tend to be higher than average, but for now the USD is on the back foot across the board. The chink in the employment armor could cause other central banks to act as the Federal Reserve is more likely to wait. That put further pressure on the Bank of Japan and the European Central Bank. The BoJ is expected to add to its record stimulus program next week.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
AUD/USD dips below 0.6600 following RBA’s decision
The Australian Dollar registered losses of around 0.42% against the US Dollar on Tuesday, following the RBA's monetary policy decision to keep rates unchanged. However, it was perceived as a dovish decision. As Wednesday's Asian session began, the AUD/USD trades near 0.6591.
EUR/USD lacks momentum, churns near 1.0750
EUR/USD cycled familiar levels again on Tuesday, testing the waters near 1.0750 as broader markets look for signals to push in either direction. Risk appetite was crimped on Tuesday after Fedspeak from key US Federal Reserve officials threw caution on hopes for approaching rate cuts from the Fed.
Gold wanes as US Dollar soars, unfazed by lower US yields
Gold price slipped during the North American session, dropping around 0.4% amid a strong US Dollar and falling US Treasury bond yields. A scarce economic docket in the United States would keep investors focused on Federal Reserve officials during the week after last Friday’s US employment report.
Democrats to introduce bill targeting crypto mixing services
Rep. Sean Casten revealed in a House hearing on Tuesday that Democrats are planning to issue a bill this week that would target crypto-mixing protocols. Democrats and Republicans also clashed over the SEC's recent action against crypto companies.
Living vicariously through rate cut expectations
U.S. stock indexes made gains on Tuesday as concerns about an overheating U.S. economy ease, particularly with incoming economic reports showing data surprises at their most negative levels since February of last year.