One would have expected the Dollar to aggressively appreciate after the United States added an astounding 304,000 jobs to its economy in January despite the 35-day partial government shutdown.
Although the non-farm payrolls smashed expectations, this was clearly overshadowed by tepid wage growth, rising unemployment and a sizeable revision to December’s NFP figure which was trimmed to 222k. With average wages dipping to 3.2%, from 3.3% in December and unemployment ticking up to 4% from 3.9%, this report is nothing to celebrate about. Repeated signs of wage growth failing to accelerate is likely to stimulate concerns over subdued inflationary pressures in the United States. With speculation already in the air over the Fed taking a ‘pause’ on rate hikes following January’s dovish Fed meeting, today’s jobs report may have just reinforced these expectations.
The Dollar’s bearish price action illustrates how investors feel about January’s jobs report with prices trading around 95.50 as of writing. An intraday breakdown below 95.40 is seen sending prices towards 95.20 in the near term.
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