The USD has been on a steep retreat as the odds of the FED continuing to raise interest rates declined dramatically after the March banking crisis and
The USD has been on a steep retreat as the odds of the FED continuing to raise interest rates declined dramatically after the March banking crisis and the weaker economic numbers, particularly the softer inflation and recently, and recently, the softening jobs market. So, besides slowing inflation from record highs, now the FED has to stop because of a weaker economy, and chances are that they will start cutting rates not too late from topping out.
The JOLTS jobs and the ADP employment figures came in pretty weak earlier in the week, although, the non-farm employment payrolls (NFP) saved the USD this week, after it had been retreating lower since Monday. EUR/USD was getting close to 1.10, but it retreated and closed the week around 1.09.
The US NFP jobs report showed strong numbers, particularly in the household survey. However, the establishment survey was boosted by significant government hiring, which may have skewed the results. The report was released during a holiday period when market activity was lower than usual, which could also have played a role in the market’s reaction.
March 2023 US Non-Farm Payrolls Report
- March non-farm payrolls +236K vs +239K expected
- Prior was +311K (revised to +326K)
- Two-month net revision -17K
- Unemployment rate 3.5% vs 3.6% expected
- Prior unemployment rate 3.6%
- Participation rate 62.6% vs 62.5% prior (was 63.4% pre-pandemic)
- U6 underemployment rate 6.7% vs 6.6% prior
- Average hourly earnings +0.3% m/m vs +0.3% expected
- Average hourly earnings +4.2% y/y vs +4.3% expected
- Average weekly hours 34.4 vs 34.5 expected
- Change in private payrolls +189K vs +215K expected
- Change in manufacturing payrolls -1K vs +5K expected
- Household survey +577K vs +177K prior
- Birth-death adjustment vs +176K jobs prior
The US dollar is higher on the kneejerk and has continued higher since. This report lands into a very thin FX market owing to US and European holidays. EUR/USD slipped to 1.0880 from 1.0915 while USD/JPY has risen to 132.36 from 131.73.
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