NFP Quick Analysis: Why the meager 245K rise is unlikely to depress the dollar, three reasons


  • The US economy gained only 245,000 jobs in November, far below expectations. 
  • Weak job gains are unlikely to trigger robust stimulus. 
  • A squeeze on dollar shorts ahead of the weekend 

It is all a matter of timing. An increase of 245,000 jobs would be considered robust in the pre-pandemic era, but when the data relates to November 2020, a figure in the upper edge of the old normal represents the end of the recovery. 

NFP live coverage

The US dollar edged lower in the initial aftermath but has three reasons to bounce after suffering a downfall throughout the week.

1) Limited impact on lawmakers

One of the reasons for the dollar's downfall came from a bipartisan group of senators who laid out a $908 billion stimulus deal. Despite the across-the-aisle nature, Senate Majority Leader Mitch McConnell has remained mum on the topic and he reportedly prefers a smaller package. 

Is this weakness enough to push McConnell and others to action? It may raise the chances of approving a deal worth around $1 trillion – but that is already priced in by markets. Without a bigger relief package – which may or may not come in January – the safe-haven dollar could rise. 

2) Vaccine bounce

Another unrelated risk-on factor came from the UK's approval of the Pfizer/BioNTech coronavirus vaccine. However, Dr. Anthony Fauci criticized the rapid process and the firm will likely produce fewer doses. While Fauci later apologized, these immunization concerns may also add to pressure on the safe-haven greenback. This is the chance for profit-taking

3) Fed firmly on hold

Jerome Powell, Chairman of the Federal Reserve, testified on Capitol Hill and refrained from offering more stimulus in the upcoming meeting. He has good reasons – waiting for the vaccine, for the new administration, and for seeing the full impact of the virus on the economy. While job growth is weak, it is insufficient to trigger more monetary stimulus – not enough. 

More Dollar downfall explained and what's next for markets

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.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD: Bulls coming up for air into the Fed

EUR/USD is riding the trendline support towards the 61.8% Fibonacci retracement level of the prior bearish impulse. The crosses are also poised for upside continuations in EUR/JPY for instance were bulls need a clean break of 133.50.

EUR/USD News

GBP/USD: Bears in control, cling to multi-day support near 1.4080

The GBP/USD pair started the session on Wednesday on a lower note. The pair recovered from the low of 1.4034 on Tuesday to close near the 1.4080 mark, where it waivers now. Momentum oscillator hints at downside momentum.

GBP/USD News

EUR/USD: Bulls coming up for air into the Fed

EUR/USD is riding the trendline support towards the 61.8% Fibonacci retracement level of the prior bearish impulse. The crosses are also poised for upside continuations in EUR/JPY for instance were bulls need a clean break of 133.50.

EUR/USD News

Shiba Inu ready to reverse to $0.0000050

SHIB price faces stiff resistance ahead. Shiba Inu has had a difficult time recovering, suggesting that it may soon face rejection. In the following video, FXStreet's analysts evaluate where SHIB price could be heading next as Shiba Inu gets weaker.

Read more

FOMC Preview: Taper talk and impact on dollar

The outcome of Wednesday’s Federal Reserve monetary policy announcement could set the stage for how the U.S. dollar and currencies trade over the next month. With that in mind, the greenback maintained its bid ahead of rate decision.

Read more

Majors

Cryptocurrencies

Signatures