Dollar Muted After Payroll Miss

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Dollar Muted After Payroll Miss

JANUARY 08, 2021

The U.S. Dollar is trading in familiar ranges as markets react to the negative figure in Non-Farm Payrolls from December, indicating that there was a contraction instead of an expansion in jobs created.

Overview

It is the first time since April that this happens, following a rather turbulent end of 2020 that witnessed winter exacerbate the spread of the coronavirus. The economy shed 140K jobs instead of seeing an expected estimate of +50K. The Unemployment Rate went down to 6.7% from 6.8%, while Average Hourly Earnings did increase by more than expected at 0.8% over 0.2%. FX flows at the time of writing seem steady regardless of the figures as optimism keeps piling over the effects a more robust stimulus that could be achieved from incoming Democrats with agenda to spend as well.

Federal Reserve Vice-Chair Richard Clarida will speak at 11 AM, whose comments will be monitored for mention over how long he expects a very accommodating environment as he is one to have argued the economy can afford to wait for much higher inflationary growth before any intervention by the Fed on interest rates. Markets could reflect on a poor December and take a seat back today or relentlessly move forward as vaccination distribution is expected to pick up pace in the next month and beyond. As of now, the Bloomberg Dollar Spot Index is still where it began on Monday.


What to Watch Today…

  • Fed’s Clarida speaks at 11 a.m.

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EUR  

The Euro-zone has not given us much in terms of news or big movement, but Italy is once again testing its ability to spend beyond EU suggestion. Prime Minister Giuseppe Conte proposed the spending of €220.0 BN in its most recent budget plan for the pandemic.  It is a larger figure than thought, but it defines the use of funds that emanate from the large EU rescue package. We shall see how much data releases affect the common currency next week.

GBP  

The Pound has also not given a ton of headlines, but Prime Minister Boris Johnson wants a more aggressive approach to vaccinating people. Because of a very strict lockdown that has also been implemented in London the last few weeks, traders figure that indicators will weaken and could give room for Sterling to cede some ground. Next week should see more action as experts gauge the impact of December on the economy.

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