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US dollar dips as US payrolls disappoint with less than 200,000 jobs added

currency-newsUS dollar dips as US payrolls disappoint with less than 200,000 jobs added
The US dollar ticked lower on Friday, after the latest US non-farm payroll figures printed well below expectations.

Meanwhile, trade in the pound is mostly flat at the start of this week, with GBP/EUR buoyed at €1.1989 and GBP/USD muted at $1.3577. GBP/CAD is rangebound at C$1.7162, while GBP/AUD and GBP/NZD hold steady at AU$1.8886 and NZ$2.0054, respectively.

Coming up this week, will another rise in US inflation help to propel the ‘greenback higher?

What’s been happening?

The US dollar was placed on the defensive at the end of last week as US payrolls disappointed again, with the US economy only adding 199,000 new jobs versus forecasts of 400,000 in December.

Tempering these losses was accompanying data showing that despite the miss, US unemployment fell to a new post-pandemic low.

The euro, meanwhile, firmed on Friday after data showed a surprise acceleration of inflation in the Eurozone last month.

This appeared to contradict the European Central Bank’s (ECB) stance that the recent spike in inflation is ‘transitory’ and could place some pressure on the bank to rethink its monetary policy outlook.

Finally, the pound was left to trade sideways at the end of last week’s session, amidst concerns over the pressure on England’s hospital as the military were called in to help out in London.

What’s coming up?

Turning to this week’s session, while concerns over the Omicron Covid variant continue to fade, cases remain elevated, meaning the currency market will likely remain sensitive to Covid headlines from the UK, Eurozone and US.

Elsewhere we are likely to see the publication of the latest US inflation release act as a key catalyst of FX movement this week. Expect the US dollar to shoot higher if inflation continued to accelerate last month as this will bolster expectations for a Federal Reserve rate hike in March.

On the docket for GBP investors this week will be the publication of the UK’s monthly GDP. Will an acceleration of economic growth in November help to buoy the pound?

In the meantime, the publication of the Eurozone’s latest jobs report could offer direction to the euro this morning, with a drop in the bloc’s unemployment rate in November potentially helping the single currency to get off to a solid start this week.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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