A dismal US Non Farm Payrolls report sent the US dollar near record-lows against the euro, but an impressive recovery actually left the downtrodden slightly higher through late New York currency trading. The highly-anticipated Non Farm Payrolls report showed that employers shed a net 17,000 jobs through the month of January—the first loss in four years. Such disappointing US economic developments were virtually guaranteed to leave the dollar sharply lower through the day’s close, but forex markets seemed unwilling to continue selling the US currency despite the dismal NFP’s result. A later positive surprise in the likewise significant ISM Manufacturing report lent support to the resilient greenback, and the dollar currently trades at weekly highs against the British Pound and other major currencies.
US Nonfarm Payrolls fell below the most pessimistic of forecasts through the month of January, with the -17,000 reading sharply below estimates from all 80 analysts polled by Bloomberg News. Such bearish economic data would normally be enough to force a violent US dollar selloff—and indeed it did. Yet a similarly impressive reversal suggests that traders are yet unwilling to force further dollar losses through short-term trade. Several plausible explanations may fit the seemingly counterintuitive price action, but it remains relatively clear that such extreme reactions to NFP data cannot be predicted. Indeed, the seemingly irrational price action suggests that currency trading and broader financial markets remain very indecisive. One has to wonder whether any bit of bearish US economic data will eventually be able to lift the euro beyond the psychologically significant $1.5000 mark. As conditions currently stand, the euro seems destined for further short-term correction before making another substantive run at the $1.5000 mark.
See more about the US Non Farm Payrolls Report.
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Written by David Rodríguez, Currency Analyst for DailyFX.com,
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