Up until last month’s disappointing non farm payroll (NFP) report the U.S. dollar could count on the employment component to keep it bid. Economic data around American jobs was one of the few positive outliers as other indicators like retail sales and gross domestic product have failed to gain traction. The NFP report in March came in 100,000 jobs below expectations. The first under 200,000 in six months and the worst print since the report published in February that came it at 113,000. The Federal Reserve has stressed that the schedule of benchmark interest moves depends on economic data releases. After the softer NFP last month the expected timeline started to be pushed back from the June and September meetings and even further by some analysts.
The U.S. dollar is riding a wave started by the Federal Open Market Committee (FOMC) statement last Wednesday.
While not a glowing endorsement of U.S. economic strength, the FOMC did not signal a change of course from its current monetary policy, though Federal Reserve members still see a benchmark interest rate hike as being likely later this year. The question of the timing of a rate hike has remains dependant on economic data. This adds some volatility to data releases, and explains some of the enthusiasm for the U.S. unemployment claims release that marked the best week in 15 years, boosting the USD against all major currencies.
The FOMC endorsement and better-than-expected unemployment claims this week boosted the USD versus all major pairs except the EUR. The EUR/USD continues to climb and broke the 1.12 level recently. Major pairs like the USD/JPY march onward to the 120 level, and the Canadian loonie had its wings clipped at 1.20 to trade at 1.2120. The impact of strong employment is clear and as the NFP is published the USD will be immediately affected.