|

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.

More from Yohay Elam
Share:

Editor's Picks

AUD/USD meets support near 0.7000

AUD/USD fades Monday’s optimism and trades with decent losses in the low 0.7000s ahead of the opening bell in Asia. Indeed, spot fails to capitalise on the offered stance of the Greenback and the relatively easing tensions in the Middle East on Tuesday. In the meantime, the AUD is expected to follow the release of housing data in Oz and Chinese inflation figures, all due on Wednesday.

Japanese Yen steadies near recent lows as ceasefire, Japan intervention threats offset

USD/JPY trades around 160.15 on Tuesday, remaining close to its highest level since April 30 despite a broadly neutral intraday performance. The pair retains an underlying bullish bias, supported by expectations that US monetary policy will remain restrictive, although upside potential is being capped by the risk of intervention from Japanese authorities.

Gold dives to fresh two-month lows, aims to challenge $4,000

The selling pressure now gathers extra pace and sends Gold to new three-month lows near $4,230 per troy punce on Tuesday. That said, the yellow metal resumes its decline on the back of a recovery attempt in the US Dollar and the likelihood of a tighter-for-longer Fed this year.

Zcash Price Forecast: ZEC extends gains, targets $500 as retail demand and momentum strengthen
Zcash (ZEC) gains momentum and trades near $470 at the time of writing on Tuesday, shrugging off a broader risk-off mood primarily driven by geopolitical tensions in the Middle East and macroeconomic uncertainty. Retail activity remains relatively elevated, as reflected in the derivatives market.
Hotter US inflation numbers could further bolster Fed hike bets

Middle East tensions keep inflation risks elevated. Fed hike fully priced in by year end amid strong NFP report. US CPI data on Wednesday (12:30 GMT) to enter the spotlight. Further acceleration in inflation could drive the Dollar higher.

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.