Non-Farm Payrolls Instant Insight - Strong Job Growth Sends Dollar Soaring

This morning’s labor market data was stronger all around, validating the Federal Reserve’s decision to hold onto their hawkish bias. The details indicate that the US economy added 180k jobs in the month of March, far larger than the 130k rise that the market was expecting; while the Feb figure was also revised up from 97k to 113k. The unemployment rate dipped to 4.4%, the lowest level since 2001.

Although it seems that the market has been surprised by the news, nearly all of the leading indicators for payrolls, such as the ADP, Hudson Employment Index, Challenger Report and Employment index pointed to stronger job growth. Furthermore the seasonal weather in March brought the return of construction sector jobs. Although the US dollar hit a 2 year low against the Euro yesterday, today’s number should be enough to reverse the recent dollar bearish sentiment… As the Fed keeps interest rates intact at 5.25%, carry trades will continue to be demand, with 120 in scope for USD/JPY. Many markets closed for Good Friday, so be careful of further abnormal volatility for the rest of the session and follow through on Monday. Over the past 17 years, there have been only 3 non-farm payroll releases that coincided with Good Friday. In each of those instances, thin markets triggered significant volatility; there is no reason for this year to be any different. So do not be surprised if the Euro rebounds before reversing once again, especially since the move lower today drove it to a key technical support.