NFP, Non-farm Payrolls, USD Talking Points:
- This morning brings the release of Non-farm Payrolls data for the month of January.
- The US Dollar jumped to a fresh yearly high ahead of the release after a destructive evening in Europe, with the continent’s largest nuclear plant undergoing attack.
- This was a strong report, with headline number of +678k v/s the expected +438k. The unemployment rate came in at 3.8% v/s the 3.9% expected. And Average Hourly Earnings, a sign of wage inflation, cooled to 5.1% v/s the expected 5.8%. That last data point could be especially helpful to the FOMC ahead of their rate decision in two weeks.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
Non-farm Payrolls was released this morning to the tune of +678k . This is the final NFP release ahead of the March FOMC rate decision where the bank is expected to hike rates for the first time since 2018. But, perhaps more importantly, this would be the first step towards paring back some of the outsized accommodation that had been set since the onset of Covid.
Jobs data has remained in focus as this has been the Fed’s pressure point for liftoff. Inflation raged throughout last year but the bank continually avoided any element of tightening for fear of choking off the labor market recovery.
Added 8:40
This morning’s report has been released and both the headline number and unemployment rate bested expectations while Average Hourly Earnings cooled. The headline number printed at a strong +678k versus the expected +438k, and the unemployment rate dipped down to 3.8% when the market was looking for a 3.9% print. But, perhaps most importantly, inflation showed signs of cooling via Average Hourly Earnings, coming in at 5.1% versus the expected 5.8%.
That last part is especially important as FOMC rate policy has been in focus of late. The Fed is widely expected to begin lift-off at their rate decision in two weeks, and given the recent tumult in geopolitics, the expectation has started to build in for a standard 25 basis point hike versus the 50 basis point hike. But, with inflation cooling in this report, there is perhaps evidence of some of the ‘transitory’ component of inflation beginning to price-out; but this is just one data point so we’re going to want to be careful there.
The US Dollar
The US Dollar had already broken out to fresh yearly highs ahead of this morning’s data, but this NFP report is only pushing the bid higher.
I had looked at this setup yesterday, sharing a short-term ascending triangle formation that had brewed after a couple of different tests of a key zone of resistance. That breakout has now taken-hold and prices in DXY are now approaching the 99 level on the chart.
US Dollar Hourly Price Chart
Chart prepared by James Stanley; USD, DXY on Tradingview
— Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
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