Week in FX Europe – NFP: Smoke and Mirrors For the EUR?

How bad is the US job participation rate? Throwing around a few numbers and assuming that the US participation rate stayed steady, analysts calculate that last months unemployment rate would actually rise to +7.55% instead of falling to Friday’s +7.3%. Smoke and mirrors? Difficult to say, but it certainly gives the perception that everything is on the “up.” What’s even more frightening is that if the participation rate rose in line with US demographics in the past five-years then the actual US unemployment rate would be just shy of +10%!

Friday’s numbers are best describing how “activeness in the US workforce has been key in shifting the country’s labor landscape.” The weaker than expected NFP report has helped the EUR for the time being. Even Putin’s comments that Russia will continue to sell weapons to Syria (sure to change over time) temporarily added direct pressure to the dollar and favored the safer-haven trade. Despite this market remaining long the dollar, it will be the markets view on, when Fed tapering actually occurs and how much, that will have the strongest influence on both the EUR and Emerging Market currency values going forward.

The Syria situation and the US employment fallout are sure to blind the markets until Obama addresses the nation on Tuesday. Less risky trades will favor the EUR, JPY and CHF on pullbacks.


* CNY New Yuan Loans
* CNY Consumer Price Index
* NZD Reserve Bank of New Zealand Rate Decision
* AUD Employment Change
* AUD Unemployment Rate
* EUR ECB Publishes Monthly Report
* USD Advance Retail Sales
* USD U. of Michigan Confidence

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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