US Dollar Index smashes rivals amid weak NFP figures

The US dollar index settles the score for the week against other majors during a week full of mixed US data and the always waited NFP figure. Although, this time Nonfarm payrolls added no value to the greenback narrative, the DXY recovered some losses after trading at the low in 2017; the 101.30 figure.

Market activity surprised on Friday as the Average Hourly Earnings (MoM) posted 0.4% from a previous negative figure (0.1%) and a not too far 0.3% consensus. Greenback rose against commodity currencies, then accelerated to smash with more than 150 pips gain versus the Great British Pound and had a decent +80 pips gained over the euro. The Japanese Yen was another hit and run for the dollar as it recovered from 105.06 (session's low) to trade above 107.00 (round figure).

Economic data was just good enough on Friday to make sense for bulls to add more dollar positions; short-term recovery? On the other hand, NFP posted 156K below market consensus from 178K and a previous robust result of 204K (revised).

“Before the report, we suggested that hourly earnings may be the most important component. It rose 0.4% for new cyclical high year-over-year pace of 2.9% (which is the fastest pace since 2009). Looking ahead to January, there is risk that earnings growth slows.  Last January average hourly earnings rose 0.5%, which is the second highest since the financial crisis.  Minimum wage was lifted at the start of the year in 19 states, but the impact on the national figures will likely be negligible,” said analysts at Brown Brothers Harriman (BBH). Regarding the NFP figures, they added: “The US created a newt 156k jobs in December, which was slightly disappointing.”

Levels to watch

The Dollar Index is about to face a challenging week if further US data fails to fuel the next leg up. For now, the trend continues to favor the upside. The greenback received oxygen to fight back four-consecutive sessions where the arguments for a deeper pullback seemed imminent.

In Wall Street, the Dow Jones posted a marginal 0.45% gain to end around 19,988 figure. Moreover, the S&P500 reached a quite similar gain to end the week close to 0.45% (+10.16 points) both ending on a decent note.

To the upside, resistance might been seen at 103.20/60, then on the downside, a support to track clocks around 101.20/100.80.

EUR/USD: Nonfarm Payroll a miss, but wages save the day