Dollar Relief Buying In Wake Of Temperate Employment Data

Rounding out the week with the perpetual top ranking economic indicator, the dollar made little effort to break into new territory. After a middle of the road print from the monthly payroll report, and a slight deceleration in red hot wage growth, the unwinding of tightly wound positioning favored a greenback push as volatility settled into week’s end.

Offering up the biggest contrast in price action before and after the morning news rush, the EURUSD broke a 20-point range to tag 1.3060 before doubling back for 100 points. A little more aimless in its follow through, the pound rallied 105 points from overnight lows to 1.9750, but the full retracement brought the currency right back to its previous range with the dollar. Already testing the low of its aging range, USDCHF slipped on a quick move to 1.2380 before plowing back into the congestion area up at 1.2480. Finally, the basing on USDJPY 120.63 held back the initial anti-dollar move for a 75 point bounce.
Wednesday’s evenly dispersed fundamentals and one-sided price action seems to have been the perfect fluke for traders to skim profits this week. Today’s indicators, including arguably the tallest indicator in a week of giants, largely fell flat. From the undisputed king of the day, NFPs, a 111,000 addition to January payrolls was a relative number. For the short-term traders looking for immediate gratification, the number was disappointing when setup next to the 150,000 print expected. Alternatively, economists and position traders saw the number as proof positive that the stabilization the Fed has linked between employment and economic growth is genuine. For both parties though, the upward revision to a five month high 206,000 new hires was a considerable surprise and likely the shining statistic from the whole gauge. Sorting through the rest of the Labor Department’s data, moderation was certainly a theme. Service-based firms took on 104,000 new employees, the smallest monthly addition since May. At the same time, the struggling manufacturing sector reported a net lay off for the seventh consecutive month. All of the sector activity measured up to a bump higher in the jobless rate to 4.6 percent. Bridging the link between labor trends and inflation, average earnings growth slowed to 0.2 percent, the slowest pace in eighth months; while the annual read finally backed off from its multi-year high 4.2 percent gate.
Considering the staid price action after the labor data scrolled after the ticker, the market had plenty of time to fully digest the numbers. When a push was made to trigger stops and limit entry orders, the decision was made for a broad dollar bid. This move aligned itself well to the factory orders report that came out a short time later. According to the survey, bookings for producers in December jumped 2.4 percent, the most in nine months. The pick up in demand suggests the recent slump in manufacturing activity may be transitory as firms turn pick up the pace in production after sufficiently working off the glut in inventories. Elsewhere, the revision on the University of Michigan/Reuters Consumer Confidence survey for January was marginally lower than the initial report. However, at 96.9, the indicator is still at an over two-year high.
Stocks indices were split on how to take the stable employment number as the impact on revenues balances the projections cooling inflation. The biggest move by 15:55 GMT came from the early 0.26 percent jump in NASDAQ Composite to 2,474.90. Migrating away from tech stocks, the S&P 500 rose 0.16 percent to 1,448.28 while the Dow slipped only marginally to 12,671.28. After the astonishing earnings report from Exxon yesterday, the $0.12 drop in forth quarter profit growth compared to a year ago lead Chevron shares to loose altitude. Shares of Chevron dropped $0.61 or 0.8 percent to $73.86. Conversely, a 73 percent drop in profit and a weaker than expected sales forecast was shrugged off by Electronic Arts shares which rallied 5.7 percent or $2.86 to $53.40.
The tension in treasuries before the NFP number was obvious as the benchmark note surged 20/32nds in the moments after the release. By 15:55 GMT, the 10-year note was up 7/32nds to 98-19 as yields slipped 3 basis points to 4.806. T-Bonds were up 11/32nds to 93-24 while yields shed 2 basis points to 4.905.