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Friday, 6 January 2012

US Nonfarm Payrolls Crank Up the Dollar

current affairs, US jobs, nonfarm

The Sterling to US Dollar exchange rate is currently 1.538. The Dollar has made advancements on the majors, benefitting from its position as the primary safe haven currency in this time of economic global anxiety. Risk correlated assets lost out in the Asian session; the MSCI Asia Pacific regional benchmark equity index lost 1.3% overnight while the greenback gained 0.2%. Risk correlated currencies (Aussie Dollar, New Zealand Dollar, Canadian Dollar) are also under threat from safe haven flows.

The US Dollar looks set to strengthen further on the back of better than expected Nonfarm Payroll statistics. After November’s 100,000 gain, the US added a further 200,000 workers to payrolls in December. Projections had suggested a 155,000 gain for December and a static unemployment rate, but the improved figure caused an unexpected fall in unemployment from 6.7% to 8.5% - the lowest since February 2009.

The results are being hailed by some as evidence that the US economy is picking up the pace towards financial growth, but they acknowledge that the US must decouple from the Eurozone, to avoid being embroiled in a global meltdown. With more people in work it stands to reason that the economy should grow as household spending makes up 70% of the world’s largest economy.

Average hourly earnings rose 0.2% to $23.24 and the average work week for employees increased to 34.4 hours. The wage growth looked to have immediate impact with holiday sales figures for U.S retailers improving 3.5% from last year.

With no economic releases today for the UK the Dollar has capitalised, and this trend could continue further given Britain’s exposure to the ever-deepening sovereign debt crisis. Expect technical resistance around 1.536 as the Dollar rallies towards October lows of 1.527.

Cutting Edge Current Affairs Courtesy of:
Josh Ferry Woodard 

pound, dollar, chart, curreny

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