Summary:
- NFP employment change: 200k vs 181k exp and 148k prior
- Average earnings beat forecasts
- USD moving higher with USDJPY back above 110
The eagerly anticipated US NFP report has come in better than expected with a strong headline print and above forecast wage figures. The headline reading showed 200k jobs had been added in the month of January, above both the expected (181k) and prior (148k). Earlier in the week we got a solid ADP report of 234k and whilst this represent a small drop on the previous of 242k it is impressively high nonetheless.
The NFP print improved in the last month to close the gap with the ADP equivalent. Source: XTB Macrobond
Whilst the headline reading attracts a lot of attention barring a disastrous print (100k or less) it was unlikely to provide too much in terms of market moves. Given the persistent below target inflation the wages numbers have been seen as more important of late and there was more good news for the US dollar here.
Wages rose by more than expected and they could soon be seen to start dragging inflation higher. Source: XTB Macrobond
Average earnings in Y/Y terms came in at 2.9% – well above the 2.6% exp whilst the M/M equivalent also beat forecasts for a 0.2% rise in printing 0.3%. This has seen a nice move higher in the US dollar and some comments on the data in the immediate aftermath from Fed’s Kashkari have fanned the flames of the rally further. Speaking on CNBC the renowned dove said the following:
- If wage growth continues it could impact rates
- Data is among the first signs we’re finally seeing wages grow
- Could still be slack in the labour market
The market reaction has been fairly clear in the 45 minutes since the release with US 10-year yields hitting their highest levels in 4 years, supporting the USD higher and sinking precious metal such as Gold and Silver. The USDJPY has moved back above the 100 level since the data dropped.
USDJPY had broken above prior resistance at 109.74 and received a further boost with the NFP release. Source: xStation