Let’s skip the formalities: Today’s NFP report was essentially perfect. The marquee U.S. (and global) jobs report showed that the world’s largest economy created a stunning 271,000 jobs, crushing economist’s best estimate of 181,000 and the previous report’s negatively-revised 137,000 reading.
Zero-bound money – quality aside – lowers incentives to expand loans and create credit growth. Will Rogers once humorously said in the Depression that he was more concerned about the return of his money than the return on his money.
Mario Draghi, the Pied Piper of the European Central Bank, played a familiar tune and the markets followed. Global stock markets soared as the man with the magic flute (or is it a printing press) vowed that he is ready to act if needed and is open to a whole menu of monetary policy instruments to root out the rats of disinflation that signals risk to growth.
Stocks rose in the United States and Europe and the dollar hit a three-week high against the euro after European Central Bank President Mario Draghi said further rate cuts were being considered to stimulate the euro zone economy.
With the prospect of a further easing from one of the world’s most important central banks, you would expect to see strength in commodities like oil, gold and other metals, but the accompanying dollar strength appears to be overwhelming this effect.
The U.S. dollar was up after European Central Bank Chief Mario Draghi took a dovish tone on the states of the broader European economy. The dollar gained against safe-haven currencies like the yen and the Swiss franc and was boosted by a surge in the U.S. markets thanks to stronger-than-expected earnings from a number of firms.