The U.S. dollar was mostly flat overnight, posting modest gains versus the sterling but continuing to lose versus the Euro.
Overview
The greenback is seeing a modest boost in early trading following a blowout jobs report released this morning. Data showed that payrolls rose 467K in January, well above median estimates of 125K. Estimates ranged widely due to seasonal circumstances and as Omicron peaked in January, but the 467K was nearly double the high-end estimate of 250K jobs added. Adding to the strong labor story were revisions from previous months which added 709K jobs over the past two months. While today’s print should be taken with a grain of salt, it might allow the Federal Reserve to argue we have reached full employment and move forward with aggressive interest rate hikes later this year. Hence, the dollar’s small pop higher.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro continued its recent rally against the U.S. dollar overnight. At the time of writing yesterday, we knew the European Central Bank left interest rates unchanged which were widely expected. Later, ECB chief Christine Lagarde said that she could not rule out interest rate hikes throughout 2022 which sent the Euro on a 1.3% rally. Some market participants are now pricing in 50 basis points worth of tightening this year. EUR/USD pushed modestly higher overnight and is now at a year-to-date high.
CAD
The Canadian dollar was under pressure overnight, but its losses are accelerating in early trading following a disappointing jobs print. The Canadian economy lost 200,100 jobs in January, badly failing to miss dour estimates of a 110K decline.
The unemployment rate jumped to 6.5% from 5.9% in December. Analysts have been quick to blame the Omicron-related lockdowns as the reason for the labor miss. Indeed, 113K of the lost jobs were in pandemic-exposed sectors such as accommodations and food services. The loonie is down 0.7% from yesterday’s close.
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