Strong US Employment could Signal Recovery

The Department of Labor published the NFP report that showed a 227,000 increase in jobs in February and an upward revision to the already positive January figures 284,000 jobs. As employment remains one of the biggest issues in the U.S. prior this year’s election this is good news for the incumbent Barrack Obama.

The unemployment rate held steady at 8.3 percent as the labour force participation grew as well. The biggest gains where in education and health services, while construction and government lost jobs.

Below are some other highlights of the week:


Americas

  • USD: US Economy adds 227,000 jobs in February with the release of the NFP report
  • USD: ISM non-manufacturing recorded an uptick of +0.5 points to 57.3 in its headline index last month, beating expectations that it would revert to 56.1 after having risen +3.8 points in January. The print remains shy of the 59 peak of a year ago. Digging deeper, business activity and new orders rose, while the employment index retracted modestly.
  • CAD: Ivey Purchases Managers index was at 66.5 on a seasonally adjusted basis in Canada from January. Digging deeper, the employment index was 58.8 while inventories was at 54.9, both higher prints than the previous month.
  • USD: According to ADP private sector jobs increased +216k this month and in line with expectations. January was revised higher to +173k from +170k. ADP also announced revisions to 2011 job numbers to reflect new seasonal factors and “regressional estimates to put the data closer to the labour series.”
  • CAD: Monthly building permits plummeted in January (-12.3%), deepest decline in eight-months. The plunge took out the previous months +10.5% gain.
  • USD: US weekly claims rose by +8k to +362k,. It was the third consecutive rise in the series. Even with the largest rise, new claims continue to hover around its four year lows. The figures are consistent with “continued healing in the labour markets.”
  • BoC: Governor Carney kept rates on hold at +1%. The “hawkish’ communiqué highlights ‘tentative signs of stabilization in European bank funding and sovereign debt markets’ and improved conditions in global financial markets. The Bank sees US expansion proceeding at a modest pace and growth in China moderating to a still-high rate, as expected. The BoC says recent developments “suggest that the outlook for the Canadian economy is marginally improved.”
  • USD: The big dollar and JPY trade on the back foot as markets anticipate a successful conclusion to the Greek PSI. Reports so far have pointed to a participation rate upwards of +60%, which should allow the swap to move forward with the triggering of collective action clauses and CDS. All will be revealed later this morning.

 

EUROPE Week in FX

ASIA Week in FX

 

WEEK AHEAD

  • Monetary policy announcements continue from JPY, CHF and USD
  • Economic and consumer sentiment is delivered from Germany and USD
  • USD is busy with Inflation Indicators and Retail Sales Data
  • Job data is released in GBP and USD
  • USD’s Philly Fed Manufacturing Index is reported near weeks end

 

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell