US NFP a big beat but earnings miss again

USDJPY, H1                 

U.S. nonfarm payrolls climbed 235k in February after January’s 238k increase (revised from 227k), while December’s 157k rise was bumped to 155k for a net 9k gain. The unemployment rate fell to 4.7% versus 4.8% previously. The labor force rose 340k after the prior 76k gain, while household employment bounced 447k from -30k. Average hourly earnings edged up 0.2%, the same as in January (revised from 0.1%) but missed expectations of 0.3% the year on year number was in line at 2.8%. The labour force participation rate rose to 63.0%. For the guts of the report, total private payrolls surged 227k (compared to ADP’s 298k), with the goods producing sector adding 95k. Manufacturing jobs rose 28k, with construction up 58k. Jobs in the service sector increased 132k, while the government added 8k. This is a solid report to start off the Trump administration that will prime the markets for a rate hike on Wednesday.

The dollar initially dropped after the jobs report, which revealed a better than forecast NFP print of 235k, and an in-line with consensus 0.2% rise in hourly earnings. The dollar sell-off may have come on disappointment the NFP outcome missed the ADP reading of 297k seen on Wednesday, though bigger picture, the data were good enough to keep expectations for a Fed rate hike next week intact. EURUSD popped to 1.0650 from 1.0600, as USDJPY fell from 115.40 to 115.12 and cable pooed to 1.2185 from 1.2150.

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Stuart Cowell

Senior Market Analyst


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