US Dollar Whipsaws on November NFP as Jobs Beat, Wages Miss

US Dollar Whipsaws explained by professional Forex trading experts the “US Dollar Whipsaws” FX trading team.

US Dollar Whipsaws

The United States economy saw jobs growth increase by +228K in November, easily beating expectations of +196K, as whatever remnants of the impact surrounding the hurricanes in the third quarter having seemingly passed. Other parts of the report painted a mixed picture of labor force strength. Even though the unemployment rate (U3) held at the cycle low of 4.1%, the labor force participation rate held at 62.7%.

It’s important to keep in mind that the US economy doesn’t considerable such strength in the headline figure to maintain the unemployment rate at its current “full employment” level. According to the Atlanta Fed jobs calculator, the US economy needs to add +110K jobs per month over the next 12-months in order to keep the unemployment rate at 4.1%.

The worst part of the jobs report, essentially nullifying any positivity on the headline, was the wage growth component. Coming in at +2.5% versus +2.7% expected (y/y), this marks another tally in the “disinflation” column that Fed officials have seemingly been adding to in recent months.

As far as near-term rate hikes are concerned, this report has had minimal impact. Fed funds rate expectations continue to price in next week for a rate move, with hike odds holding at 100% after the data (where they’ve been since October 26).

US Dollar Whipsaws Conclusion

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