Non-Farm Payrolls only 214K but unemployment rate 5.8% +

A little bit for everyone in the jobs report: Quick data: 214K job gains, revisions add 31K to previous data, 5.8% unemployment, lowest since July 2008, U-6 to 11.5%, lowest since 2008, average hourly earnings, +0.1%, 2% y/y. All in all, it’s quite alright

The dollar initially fell but then stabilized before ticking down again. It’s quite a whipsaw. And the move continues: the dollar is now stronger as markets digest the data.

The US was expected to report a job gain of around 235K in October after 248K (before revisions). The unemployment rate was expected to remain at 5.9%. In September, the participation rate stood at 62.7% and average hourly earnings stood at 2%.

Data (updated)

• Non-Farm Payrolls:  214K (exp. +235K, September saw 248K before revisions)
• Participation Rate: 62.8%(62.7% last month )
• Unemployment Rate: 5.8%  (exp.5.9%, last month 5.9% before revisions)
• Revisions:  +31K: August is now 203K (originally 142K, already revised once) and September revised up to 256K  (+69K last month)
• Average Hourly Earnings: 0.1% m/m, 2% y/y  (exp. +0.2%, last month 0% m/m, 2.1% y/y)
• Private Sector +209K (ADP showed a gain of +230K jobs).
• Real Unemployment Rate (U-6): 11.5%  (previous: 11.8%).
• Employment to population ratio: 59.2% – a big rise (previous: 59%)
• Average workweek: 34.6 (last month: 34.6).

Analysis and currency reaction (updated)

• EUR/USD traded around 1.24 towards the publication, hit hard by Draghi’s determination. The euro rose to resistance at 1.2440 but then fell back. A relatively hawkish comment by Weidmann also helped.
• GBP/USD was on the back foot around 1.5820, mostly catching up with weakness elsewhere. After the move, GBP/USD went to 1.5850 before retreating.
• USD/JPY traded in high range around 115.30, still boosted by Kamikaze Kuroda. The pair hit a new multi-year high before and temporarily slipping under 115.
• USD/CAD 1.1140. Canada also published its jobs report at the same time. Canada reported a blockbuster jobs report – USD/CAD plungses
• AUD/USD traded around 0.8585, catching up with other commodity currencies, and suffering from worries about China. The pair is above 0.86 after the release.
• NZD/USD traded under 0.77, despite a great jobs report in New Zealand. It is a big higher now.

Quick analysis

• Details are better than the headline
• Wages still behind, but we expect them to rise in January.
• The unemployment rate fell despite a rise in the participation rate
• The fall in the real unemployment rate is certainly encouraging
• The rise in the slow moving employment to population ratio is encouraging.
• The report reaffirms the stance of the Fed. We get one more report before the next decision.

Background

Economic data in the US was mostly positive for the US, providing hope for a strong number. Among the recent numbers: jobless claims at an average of 279K, the best since the year 2000. ADP showed a nice gain in private sector jobs and we had the best employment component in ISM Non-Manufacturing PMI since 2005.

The dollar has certainly been on a roll across the board, with specific strength against the yen and the euro. Here is the preview: trading the NFP with EUR/USD.

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