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#1 08-02-2021 14:54:22

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: mixed US jobs data sends the dollar lower

EUR/USD: mixed US jobs data sends the dollar lower


The Non-Farm Wages (NFP) report released on Friday was the highlight of the last trading week. The USD traded in a bullish tone until Friday, only to lose weekly gains on weaker jobs data.

As all data up to Friday's report pointed to improvements in the job market, many traders were trapped on the wrong side of the market. For example, ADP, or private wages, showed a strong rebound, as did the components of employment in the ISM manufacturing and non-manufacturing reports.

Yet NFPs have been weak - the US labor market added just 50,000 jobs in January. In addition, the December figure has been revised down from -140,000 to -226,000. Revisions are still a wildcard in the NFP release, as they alone can significantly change sentiment.

The unemployment rate fell to 6.2%.

All was not negative in Friday's report. For example, the unemployment rate fell from 6.8% to 6.2%. Still, the revision for December was large enough to overcome the positive news given by the unemployment rate.

The problem with the Jobs Report is that the employment data lags the business cycle. That's why it was hoped that a stronger report would signal an economy that has already bottomed out. This was not the case, as the revisions pointed out. However, poor employment data did not stop the stock market from reaching new highs. All indices ended in green territory as the market focuses more on stimulus and continued support than on the real economy.

If we look at some of the details of the report, we find that most of the jobs (44,000) are in government. Therefore, the data confirms that the US economy, like all advanced economies around the world, still depends on central bank and government support. Permanent job losses continue to rise, and there is no end to a trend reversal.

A well-functioning labour market should create jobs overall - we should see the private and public sectors helping to gain jobs. Until this is the case, the labour market will remain soft and we will not be able to talk about an economic recovery.

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