The US dollar recently drew support from a stronger than expected non-farm payrolls report released last Friday. For the month of February, the US economy added 175,000 jobs, higher than the estimated 151,000 increase. Aside from that, the readings for the previous two months were upgraded, indicating that the effects of the extreme weather conditions were not as bad as initially estimated. Note however that the jobless rate ticked up from 6.6% to 6.7% as the participation rate held steady at 63%, indicating that Americans are staying in the labor force instead of giving up hope in looking for full-time jobs.
One data point does not make a trend though so most market watchers are wary about calling this a US labor recovery just yet. At the very least, this confirms that the Fed will push through with its taper schedule, as Yellen previously remarked that the slowdown in hiring was merely a result of seasonal factors. This could keep the dollar supported in the near term, especially with uncertainty still present in other parts of the global economy.
Forex Major Currencies Performance
The euro seems to be the only major currency that’s putting up a very strong fight against dollar strength for now, as the ECB has recently turned more hawkish in its latest statement. On the other hand, the Canadian dollar has given up a lot of ground because of bleak Canadian jobs data and the pullback in oil prices.
Data is light in Monday’s trading, with only the Japanese Economy Watchers Sentiment index being released in the Tokyo trading session. The report churned out a weaker than expected reading but there wasn’t much of a reaction from yen pairs, suggesting that traders are waiting for the top-tier reports this week to unfold before taking any large positions on currency pairs.
In the next few hours, we’ll see French and Italian manufacturing production as well as Swiss retail sales. Also due later on are Canadian housing starts figures and this might provide volatility for USD/CAD.
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