The U.S. dollar is mixed against majors after staging a comeback late in the week. The USD regained some ground even though the biggest indicator in the market the U.S. non farm payrolls (NFP) report disappointed by adding less than the expected number of jobs (156,000 versus 180,000) but the data point that had more significance was the low pace of growth of wages at 0.1%. A third rate hike for U.S. interest rates could be pushed back to next year if inflation does not pick up convincing the Federal Reserve.
The U.S. jobs report came out this morning and missed the projected number on the low side. However, bond prices declined and stocks rallied! The Nasdaq futures even hit an all-time high today before reversing lower ever so slightly. We are in a highly powerful bull market in U.S. stocks.
Any hopes that the dollar could continue its rebound with an encouraging U.S. jobs report, appears to have been thrown out the window, following a "hat-trick" of losses in the recently released jobs report for August.
If Federal Reserve policy makers were already starting to question the need for another rate hike this year – and the pace thereafter – then this week’s data won’t have made them feel any more comfortable.
Total nonfarm payroll employment increased by 156,000 in August, and the unemployment rate was little changed at 4.4%, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, construction, professional and technical services, health care, and mining. Household Survey Data In August, the unemployment rate, at 4.4%, and the number of unemployed persons, at 7.1 million, were little changed. After declining earlier in the year, the unemployment rate has been either 4.3% or 4.4% since April.
The official U.S. monthly non-farm payrolls report will be released on Friday, Sept. 1. Due to the fact that some of the key leading indicators will be released after the NFP, it is even more difficult to predict this month's headline figure with any reasonable degree of confidence.
Greenback weakness has been the primary focus of FX trading this year. On Tuesday, the Dollar Index fell to a 2.5-year low of 91.62, with losses exceeding 10% since the beginning of 2017. This underperformance was a result of many factors, including the collapse of Trump trade, convergence in monetary policies, a flattening U.S. yield curve and better economic prospects throughout the globe.
Following big falls in some risk-sensitive assets on the back of North Korea tensions, a number of global stock indices and dollar currency pairs ended the session with impressive reversal-looking technical patterns as the dip buyers evidently stepped in to take advantage of the lower prices (see the technical outlook section below).