US dollar at least a half-cent higher right across the board
The US dollar immediately fell in love with higher than expected jobs growth as non-farm payrolls rose 295K compared to 235K expected.
Three caveats immediately come to mind:
- Unemployment only beat expectations because labor force participation fell to 62.8% from 62.9%
- Average hourly earnings at 2.0% vs 2.2% show that wage inflation is far from a problem
- The two month net revision was -18K and that takes a bit of the shine of the great headline number
The US dollar is roaring on the results and that's helped to take out some technical levels in EUR/USD and gold. I'm keeping a close eye on USD/JPY as it pushes up against the December high of 120.82 (last at 120.64).
One good sign that's buried a bit further down in the report is U6 unemployment, which has fallen to 11.0% from 11.3%.
It's ultra-dangerous to fight US dollar strength at the moment but I don't see the value in chasing dollar strength because this report doesn't justify the magnitude of dollar gains so far.
