NFP release ominous for USD rally

Yesterday’s release of US Non-Farm Payrolls needed to be a blowout to avoid Dollar bulls having to question the long term health of the rally. Chairman Warshes dovish tone during the Sintra speeches “price pressures have cooled over the last four weeks” should have already but traders on edge, even as the Dollar continued to grind higher.

A headline jobs figure of 57,000 against expectations closer to 113,000 is a bad start, even as unemployment fell to 4.2% and jobless claims remain arrested. An interesting fact however is that the US hospitality sector, still reeling from tighter consumer budgets off the back of successive years of high inflation, appears to have received no world cup bounce at all, even as an extra $1 billion is estimated to have been spent on beer alone during the course of the tournament.

Not to mention, data also saw a 74,000 jobs downward revision to the previous two months of data, the participation rate also contracted sharply, down to 61.5% from 61.8%, quite aggressive a drop for a relatively steady data piece. This suggests people are leaving the US labour market, somewhat juicing the overall headline jobs figure and keeping jobless claims lower.

With Warsh seeing receding inflationary pressures and the FOMC now contending with a slip, which is all it is for now, in the labour market. it certainly should give pause for thought to those previously all in on the latest Dollar rally.