U.S. Session Forex Recap – Feb 9, 2015

  • US January NFP: 257K vs. 230K expected, 329K previous, December’s reading revised higher from 252K to 329K
  • US unemployment rate: 5.7% vs. 5.6% expected, 5.6% previous
  • US average hourly earnings: +0.5% vs. +0.3% expected, -0.2% previous
  • CA unemployment rate: 6.6% vs. 6.7% expected and previous
  • CA employment change: +35.4K vs. +5K expected, -11.3K previous
  • CA building permits: +7.7% vs. +5.0% expected, -13.6% previous
  • S&P downgrades Greece’s credit rating from B to B-
  • Eurogroup Chairman Dijsselbloem gives Greece until Feb. 16 to apply for bailout extension

The dollar logged in another winning day last Friday, as forex traders priced in upside surprises in the closely-watched U.S. NFP report.

If you recall, some traders had taken profits from their long dollar trades days ahead of the event. They believed that the decline in oil prices, as well as the strong jobs sector performance in the previous months, would result to a weaker January reading and temper the Fed’s plans to eventually raise its interest rates.

There was no need for worries, as it turned out. Not only did the headline non-farm payroll figure exceed market expectations, but last month’s reading was also revised higher. In addition, average hourly earnings had also risen by its fastest rate since July 2011.

The uptick in unemployment rate was mostly shrugged off, likely due to the increase in the labor force participation rate. With one less thing for the Fed to worry about, the dollar gained against currencies with dovish central banks.

EUR/USD dropped by 136 pips (-1.19%) to 1.1320, USD/JPY jumped by 159 pips (+1.36%) to 118.84 after hitting an intraday high at 119.21, and GBP/USD slipped by 83 pips (-0.54%) to 1.5237.

The comdolls weren’t spared from the dollar’s domination. AUD/USD fell by 61 pips (-0.78%) to .7800 after hitting a low at .7779, while NZD/USD also registered a 78-pip decline (-1.05%) to .7357.

The Loonie fought a good fight after Canada also printed generally better-than-expected jobs numbers. It also helped that WTI crude inched $1.52 higher to $52.09.

CAD/JPY gained 62 pips (+0.66%) throughout the session, while EUR/CAD fell by 75 pips (-0.53%) to 1.4177. Loonie bulls got nothin’ on the dollar bulls though, as USD/CAD still jumped by 85 pips (+0.68%) to 1.2524 after dipping to 1.2381 when the jobs reports were released.

Will the dollar continue to gain against its higher-yielding counterparts? China has released its trade balance data over the weekend, but so far it has limited impact on comdolls like the Aussie. One possible reason is that traders are waiting for the impact of Japan’s current account report out at 12:50 am GMT and Australia’s ANZ job ads data printed at 12:30 am GMT.

See also:

London Session Recap

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