An excellent jobs report from the US sent the dollar higher. But the US dollar managed to maintain its gains for about one hour.
While it is hard to find good explanations for this move, we can at least be thankful for a return of action to the somewhat sleepy markets.
This is the EUR/USD 30Â minute chart, which shows how the pair dropped sharply after the NFP, but then went all the way back up:
Similar charts are seen for other major and minor currency pairs. What is going on?
From the first moment, there were doubts about the drop in the unemployment rate to 6.3% due to the drop in the participation rate to 62.8%. Had it not been for the latter drop, the unemployment rate would have risen to 6.8%. Nevertheless, we had a drop in the “real unemployment rate†to 12.3% and upwards revisions supporting the big gain in jobs.
Bigger concerns came regarding wage growth: a flat April is worrying in light of expectations for a gain of 0.2%. Nevertheless, year over year gains are at a steady 2%, in line with a healthy inflation level.
So is it the situation in the Ukraine? Russia has called an emergency meeting of the security council after Ukraine tried to retake rebel controlled territory. That might have hurt US stocks and in turn hurt the dollar. However, this explanation is not that convincing.
Another explanation is Friday madness:Â traders scrambling to close positions. This kind of action has not been seen in a long time, and these kind of moves remind us of the good old days.
Here is a musical tribute from the late Marvin Gaye: What’s going on
More: NFP probably not doing the job for Draghi – 3 reasons
