US Dollar to Resume Uptrend Next Week After the NFP Data
The USD made a comeback in the US session on Friday after the NFP report, which suggests that next week it will resume the larger bullish trend.
The November jobs report brought mixed signals, with a focus on the rise in unemployment and a dip in labor force participation. While some estimates had placed the unemployment rate consensus at 4.1%, the unrounded figure of 4.2457% suggests a more significant increase than initially apparent. The participation rate also dropped by 0.1 percentage points, which would typically drive unemployment even higher under standard conditions. Factoring in these elements, a case could be made that the true unemployment rate might be edging closer to 4.3%.
Ahead of the non-farm payrolls (NFP) report, the probability of a December rate cut stood at 70%. However, the report’s nuanced results pushed those odds to 85%, prompting a broader decline in the US dollar. The Federal Reserve, already leaning toward a 25 basis point rate cut in December, likely saw no need to reconsider its stance, as the report lacked the strength to dissuade them. Market expectations for 2025 also shifted, with anticipated rate cuts increasing from 80 basis points to 90 basis points of cuts.
EUR/USD Chart Daily – Buyers Failed to Hold Above the 20 SMA
Initially, the USD weakened following the NFP release but rebounded strongly against most major currencies as the market digested the data. For instance, EUR/USD peaked at 1.0630 before retreating to the 1.0560 range, signaling potential further declines in the coming week. The USD’s recovery was driven largely by a closer examination of the payrolls report, which painted a picture of an economy holding steady.
The resilience in the US labor market is likely to temper the Federal Reserve’s pace of easing, especially compared to regions like Europe and Canada, which face stronger arguments for rapid rate reductions. The relative strength of the US economy supports a cautious approach from the Fed, keeping it from implementing drastic cuts while maintaining the USD’s competitive position in global markets.
US November Non-Farm Payrolls Report Highlights
Headline Figures
- Non-farm payrolls: +227K (vs +200K expected)
- Previous: +12K
- Two-month net revision: +56K (vs -112K prior)
Unemployment Metrics
- Unemployment rate: 4.2% (in line with consensus, though some estimates were 4.1%)
- Unrounded unemployment rate: 4.2457% (vs 4.145% prior)
- Participation rate: 62.5% (vs 62.6% prior)
- U6 underemployment rate: 7.8% (vs 7.7% prior)
Wages and Hours
- Average hourly earnings (m/m): +0.4% (vs +0.3% expected)
- Previous: +0.4%
- Average hourly earnings (y/y): 4.0% (unchanged from prior)
- Average weekly hours: 34.3 (unchanged from prior)
Sector-Specific Employment Changes
- Private payrolls: +194K (vs +200K expected)
- Previous private payrolls: +36K (revised from +12K)
- Manufacturing payrolls: +22K (vs -46K prior)
- Government jobs: +33K (vs +40K prior)
Household Survey Breakdown
- Full-time employment: -355K (vs -164K prior)
- Part-time employment: +23K (vs -227K prior)
- Total household employment: -355K
EUR/USD Live Chart
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