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USD: robust payrolls report supportive for the US dollar - MUFG

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 11, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Lee Hardman, Currency Analyst at MUFG, suggests that even the release of the robust US non-farm payrolls report on Friday has failed to at least temporarily lighten global investors’ darkened moods.

    Key Quotes

    “The report was much stronger than expected revealing that the US economy added 292k jobs in December likely boosted by the warmer winter weather. Employment growth in prior months was also revised higher by 50k bringing the total increase in employment for the calendar year to another solid 2.65 million. It will be reassuring to the Fed that employment growth has accelerated in Q4 helping to ease concerns over the further loss of economic growth momentum in Q4.

    The most disappointing aspect of the report was the weaker than expected earnings growth which was flat in December although it was likely distorted by a temporary calendar quirk. Earnings growth is likely to rebound and strengthen further in the year ahead as the labour market continues to tighten. The positive developments in the US labour market should ultimately prove supportive for US yields and the US dollar.

    However, the intense phase of global investor risk aversion is currently dominating market direction in the near-term. The yen continues to remain the main beneficiary from safe haven flows. The latest IMM report revealed as well that short yen speculative positions have been cut back to their lowest level since October 2012 prior to the beginning of Abenomics with positioning almost back to flat. In contrast, the ongoing sell-off in emerging market currencies has accelerated further early this year. The rand and rouble have fallen sharply overnight as global commodity prices continue to remain under downward pressure as well.”
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