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With all the excitement surrounding the release of U.S. nonfarm payrolls (NFP) data, you’d think traders were watching the Super Bowl or something!

As you probably know by now, the January 2013 NFP caused some really crazy spikes after it was rolled out last Friday, pulling the markets in one direction one minute and pushing it the other the next.

But considering it gave us both good news and bad news, it’s easy to see why the dollar saw both dips and rallies in the hours leading to the weekend. Let’s start with the good bits!

Perhaps the biggest surprise in last Friday’s employment reports was the sharp upward revisions to October, November, and December’s NFP figures. When taken together, the revisions for Q4 2012 added a total of 127,000 jobs!

The large upgrades in November (from 171,000 to 247,000) and December (from 146,000 to 196,000) were particularly uplifting since they clearly show that the fiscal cliff issues didn’t stop businesses from hiring.

With the surge in jobs growth in late 2012 providing a big boost, payroll growth has averaged 200,000 for the past 3 months. Now, bear in mind that in the past, some Fed officials have suggested that jobs growth needs to hit and hold at around 200,000 a month before they can say that the job market has made a substantial turn.

It was also relieving to note that the average duration of unemployment was cut by almost three weeks to 35.3 last month, marking the lowest record since December 2010. Simply put, this just means that these days, it doesn’t take as long for the Average Joe to find work.

Also, average hourly earnings growth picked up another 0.2% after a 0.3% surge in December. Year on year, this translates to a 2.1% increase, which matches December’s rise as the largest since March 2012.

But as I said, employment reports weren’t just filled with good news. For instance, the headline NFP figure for January 2013 was below the market consensus. Analysts had expected it to come in at 161,000 but it only printed an increase of 157,000.

We also saw the unemployment rate trickle higher to 7.9% after coming in at 7.8% in December. Some would argue that the rise isn’t something to be worried about since it was primarily brought about by an increase in the participation rate and incorporation of new consensus data. However, there’s no denying that a 7.9% unemployment reading is a step farther away from the Fed’s 6.5% target. If you ask me, it’s probably enough to convince central bankers to keep the loose monetary policy in place.

So how exactly did the markets react to the mixed NFP report?

At the wake of its release, EUR/USD rallied. However, the pair quickly sold off, only to reverse directions one more time! It eventually finished the day just a few pips above its pre-NFP levels.

EUR/USD 15-minute Chart

The dollar’s reaction to the employment report to me reflects that investors aren’t too worried that the headline figure missed expectations, but neither are they being carried away by the upward revisions to Q4 2012’s stats.

Looking at the bigger picture, there hasn’t been any drastic acceleration or deterioration in payrolls growth. And so, the most recent labor figures don’t raise a need for the Fed to change its stance on monetary policy. But of course, that’s just my humble opinion.

What do you think?