The unexpected strengthening in the U.S. NFP employment report has obviously taken investors by surprise. However, the reaction displayed by the US dollar was not significant with only recording a modest increase after the publication of the data.
The U.S. economy reportedly added 467,000 jobs in the past month, far exceeding market expectations of an increase of just 110,000 jobs alone.
While the revised reading for December also showed a strengthening with an increase of 510,000 jobs compared to the previous much lower estimate of 199,000.
In addition, average hourly earnings growth also showed a better -than -expected jump with an increase of 0.7% from the expected 0.5%.
However, the unemployment rate showed a different reading, rising to 4.0% in January, disappointing market expectations to remain unchanged from the previous record of 3.9%.
These mixed figures left the currency market unresponsive, with the US dollar only registering a slight improvement over its main rivals.
Meanwhile, investors were also exposed to employment data from Canada showing disappointing readings thus prompting loonie dollar trading to decline lower against the USD.
Canada’s job change showed a larger reduction in January with a decline of around 200,000 jobs compared to expectations for less than 121,500. This figure is clearly disappointing for investors, moreover the unemployment rate also showed a drastic increase of 6.5% from 5.9% previously.
Looking at European currency developments, the euro remained stable around a one -week high against the greenback as it was still supported by optimism that an interest rate hike by the European Central Bank (ECB) would happen later this year following a hawkish statement from ECB President Christine Lagarde last week. .
In addition, the pound also traded stable after a slight slip at the end of last week's trading but still maintained gains following the Bank of England's (BOE) decision to raise interest rates for the second time since the Covid-19 pandemic at last week's policy meeting.
