During Friday’s US-session the USD rallied heavily into selling pressure closing the day at levels similar to where it started. The reason for the erratic movement was the release of the monthly US Non-farm Payroll employment data. Average expectations were for an increase in jobs of approximately 210K with an unemployment rate of 6.6%. The release saw 288K jobs added and the employment rate falling to 6.3%. The initial reaction saw the greenback jump and run, however the price action reversed throughout the session.
The market has looked for reasons for why we saw the reversal on such bullish data. Some have attributed escalating violence in Ukraine, however the US Dollar is considered a safe-haven currency and would more than likely gain support from this type of event. On further investigation a couple of negatives from the data were the participation rate falling to the lowest level since 1978. Perhaps the result of an aging population, perhaps the result of people giving up the search for gainful employment, or both. There was also no gain in average hourly earnings and mention has been made of jobs growth in low income sectors with little career progression, as opposed to growth in leading income sectors. The following week will be interesting for the US dollar.
There is a run of Australian data due this week so movement of some degree should be likely. Building approvals and job advertisements are due today. The RBA will provide its rate decision and accompanying statement tomorrow, retails sales Wednesday and employment on Thursday. Other data of interest will be a number of releases from Australia’s largest export market, China. China will be releasing a number of manufacturing figures throughout the week in addition import and export data.