- The data beats lowered expectations stemming from ADP's numbers, White Hosue comments and seasonals.
- To slow raising rates, the Fed would need to see economic pain – absolutely absent at this point.
- There is no alternative to the US dollar.
Five in a row – Nonfarm Payrolls beat expectations for a fifth consecutive month, showing the resilience of the US economy. The knee-jerk dollar decline is related to a small miss in wage data, but nothing substantial.
Similar to the response to Thursday's release of the ISM Manufacturing PMI, there is room for a countertrend The big picture is positive for the dollar.
Starting with the short-term reaction, real market expectations had already been lower. ADP's private-sector jobs report showed an increase of 132,000, already lowering projections for Nonfarm Payrolls. White House spokeswoman Karine Jean-Pierre added to the cooling estimates by saying they foresee a cooldown in the labor market. Moreover, August's NFP tends to miss expectations, and some were eyeing that figure.
All these reasons imply an even higher advance for the greenback once the dust settles. The bigger picture already backs a broader dollar rally, more than the initial price action.
Just one week ago, Fed Chair Jerome Powell vowed to fight inflation and seemed fully willing to see some economic pain. His colleagues echoed him throughout the week. Fed member Neel Kashkari seemed to glee at stock market declines.
This kind of jobs report is far from "pain" – on the contrary, it only extends the winning streak of robust job growth. It is hard for somebody calling this a one-off.
Moreover, There Is No Alternative (TINA) to buying the dollar. The energy crisis is hitting the eurozone and the UK hard, while China's downturn – covid and construction related – is weighing on commodity currencies. It would take Russia to send vast amounts of gas to Europe, China to announce stimulus or a truly devasting US economic figure to send the dollar down. This NFP is not one of them.
Therefore, the dollar is set to recover from any upcoming dip and also stage a massive rally.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.