NFP Quick Analysis: Dollar “buy the dip” opportunity? America is hiring and getting more stimulus

  • The US economy has gained 49,000 jobs in January, below expectations.
  • Dollar declines are a result of elevated expectations. 
  • Prospects of robust growth – also due to stimulus – are set to boost the greenback.

"Buy the rumor, sell the fact\' – that has been one of the consistent trading patterns through the decades and perhaps the centuries. January 2021's Nonfarm Payrolls has proved no different. 

The US gained only 49,000 jobs in January – within expectations seen on the economic calendar, but below the "whisper number." The dollar is retreating in response, but it may be only temporary, especially EUR/USD's rise toward 1.20. 

First, apart from the headline number, the Average Workweek rose to 35 hours, better than expected. The Unemployment Rate fell to 6.3%, far better than expected. Moreover, the participation rate rose only by 0.1%, from 61.4% to 61.5%. 

Secondly, there are other reasons to be cheerful. Hours before the NFP, the Senate took another step to pass a large stimulus bill by using the "reconciliation" process. Despite talks between the White House and moderate Republicans, Democrats seem keen on passing a partisan bill – which means one closer to $1.9 trillion presented by President Joe Biden. And that is dollar-positive. 

Investors have been selling US bonds in response to upbeat figures and prospects of stimulus, making the US dollar more attractive. Prospects of stronger growth and expectations that the US government would need to issue more debt are underpinning this trend. Once the dust settles, this trend is set to extend. 

The same could prove for stocks, which may also provide a "buy the dip" opportunity after several days of gains. Moreover, the Federal Reserve seems unmoved by the recent frenzy around "Reddit stocks" such as GameStop and AMC. 

Bubble or a new and positive normal? Understanding stocks, dollar and gold narratives

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD falls off 1.2050 amid mixed German CPI figures, ahead of US PMI

EUR/USD has dropped below 1.2050 as returns on US debt advance, supporting the dollar. German states have reported mixed CPI reads for February. The US ISM Manufacturing PMI and the ECB's weekly bond purchases are awaited. 


GBP/USD retreats from 1.40 as US yields resume their rise

GBP/USD is trading around 1.3950 but off the highs. US bond yields have resumed their gains, boosting the dollar. The US ISM Manufacturing PMI and stimulus news are awaited. Markit's final UK Manufacturing PMI for February was revised up to 55.1 points.


Dogecoin on the verge of a 50% breakout

DOGE price is consolidating in a descending triangle pattern, hinting at a 50% breakout soon. It has slid below the support provided by the 50, 100, and 200 four-hour moving averages indicating a lack of buyers.

Read more

XAU/USD clings to recovery gains above $1750 level, upside seems limited

Gold gained some positive traction and recovered a part of Friday’s slump to multi-month lows. Retreating US bond yields weighed on the USD and extended some support to the commodity. The upbeat market mood might keep a lid on any meaningful gains for the safe-haven XAU/USD.

Gold news

US Dollar Index struggles for direction just below 91.00 ahead of ISM

The greenback meets strong resistance in the vicinity of the 91.00 neighbourhood when tracked by the US Dollar Index (DXY) at the beginning of the week.

US Dollar Index News

Forex Majors