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NFP Quick Analysis: Mixed data keeps the USD patient like the Fed, but watch 3 other things

  • Both jobs and wages were mixed in the first report for 2019.
  • The confusing data justify a patient approach by the Fed.
  • The US Dollar may follow the Fed's lead and remain patient.

Three mixed messages:

1) Headline The US economy gained 304,000 Non-Farm jobs in January, far above 165K expected or any "whisper" expectations stemming from the upbeat ADP NFP earlier this week. However, it came on top fo a whopping downward revision from 312K to 222K for December, no less than 90K, taking the oomph out of the headline.

2) Wages: Average Hourly Earnings also provided a mixed picture: 0.1% MoM against 0.3% expected while YoY, the figure met the forecast with 3.2%.

3) Unemployment rate: Last but not least, the unemployment rate disappointed with a rise to 4% but it came on top a welcome increase in the participation rate to 63.2%. 

All in all, the US labor market is doing well, but nothing we had not known. Without any heating up in wages, inflation is not expected to surge anytime soon. The Fed can take its sweet time and remain patient.

The same goes for the US Dollar: more patience until more figures come out and paint a clearer picture. 

But other things can shake the currency.

Three things that can move the greenback

1) Trade: US-Chinese trade talks are making progress but can they strike a deal? A lot depends on the leaders.

2) Fed comments: The Fed said its word in the rate decision, but speakers can add more color in upcoming weeks.

3) Shutdown: The government is open again, but may close again on February 15th. A critical data point was not published: Q4 GDP. Developments related to the event may move markets.

Author

Yohay Elam

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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