Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

3 Reasons Why U.S. Dollar Shrugged Off Weak Payrolls

By Kathy LienForexDec 04, 2021 08:44
au.investing.com/analysis/3-reasons-why-us-dollar-shrugged-off-weak-payrolls-200493818
3 Reasons Why U.S. Dollar Shrugged Off Weak Payrolls
By Kathy Lien   |  Dec 04, 2021 08:44
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Job growth in the U.S. slowed significantly last month, with non-farm payrolls rising by only 210,000 in November, down from 546,000 in October. This was less than half of the 550,000 consensus forecast. The U.S. dollar sold off when the numbers came out but recovered quickly for three reasons:
 
1. The unemployment rate dropped to 4.2%, its lowest level since the pandemic. Economists had been looking for a more modest improvement, but the uptick in the participation rate tells us that this was not a reflection of workers dropping out of the labor force.
 
2. In total, the U.S. economy has recovered more than 80% of the jobs lost since the pandemic.
 
3. Federal Reserve rate hike expectations remained intact, with the futures market pricing in 25bp hike in June and 50bp hike in November.
 
While we are not enthused by the slowdown in average hourly earnings, the U.S. dollar recovered its losses quickly because there’s enough good news in today’s report for the Fed to accelerate its taper plans this month. Service sector activity also improved, with the ISM index rising to 69.1 from 66.7. 
 
In contrast, Canadian labor market numbers were very strong. More than 150,000 people found new work in November, five times greater than the previous month and significantly better than the 35,000 forecast. The unemployment rate also dropped to 6% from 6.7%, its lowest level since February 2020. USD/CAD fell sharply on the back of the weaker U.S. and stronger Canadian reports. We would not be surprised if the November jobs report marked a quadruple top for USD/CAD. Today’s strong jobs number should keep the Bank of Canada, which has a policy meeting next week, hawkish.
 
The Australian and New Zealand dollars fell sharply on the back of a stronger U.S. dollar and weaker Chinese data. China’s Caixin Composite and Services PMI indices declined in November – a sign that economic activity in slowing is the world’s second largest economy. The Reserve Bank of Australia has a monetary policy announcement next week. Between Omicron, equity market volatility and Chinese data, we expect the RBA to remain cautious.
 
Downward revisions to Eurozone and U.K. PMIs drove the euro and sterling lower. GBP fell more aggressively than EUR after Bank of England policy member Michael Saunders said the economic impact of Omicron is a key consideration for their December meeting. Looking ahead, aside from the rate decisions, the German ZEW survey, U.K. industrial production and monthly GDP report are also numbers to watch. For the U.S., the main focus will be on the November consumer price index and the December University of Michigan consumer sentiment report.
3 Reasons Why U.S. Dollar Shrugged Off Weak Payrolls
 

Related Articles

3 Reasons Why U.S. Dollar Shrugged Off Weak Payrolls

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email