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US Dollar Falls Against Major Peers Following Disappointing Jobs Data

December 2, 2016 at 18:43 by Yahia Barakah

A sheet of US 100-dollar bills up to the horizonThe dollar declined against most of its major peers on Friday, following a new report that revealed average jobs gains in November. The US currency, which rose during the past 3 weeks, could be having a corrected movement after its rapid rally in the wake of Donald Trump’s presidency.

The US Bureau of Labor Statistics published its report of total nonfarm payroll employment for November, showing an increase by 178,000 jobs during the month. Most of the gains were within business services and health care sectors. The report also said that the unemployment rate declined by 0.3% to reach 4.6% within the same month.

Jobs gains in September and October were revised, showing fewer added jobs than previously estimated, according to the labor report. The dollar moved lower following the release, as it continued on its way to the first weekly decline in four weeks.

Investors’ certainty that the Federal Reserve will decide to raise its interest rates in December remained unaffected. Futures prices show a 94.9% probability that the Federal Open Market Committee will push rates higher when it meets on December 14, according to the CME Group FedWatch tool.

However, the labor report put a shadow on further hikes in the near future. The data revealed that the economy might require a slow and a steady pace of raising interest rates, instead of an accelerated pace expected by investors due to Trump’s plans of increasing fiscal spending.

During the coming days, currency traders will be keeping a close eye on Italy’s referendum that takes place next Sunday, which decides the future of constitutional reforms suggested by Prime Minister Matteo Renzi. Rejecting his reforms could lead to his departure from the government, leading to a political cascade that is expected to harm the euro.

EUR/USD traded at 1.0672 as of 18:22 GMT, after touching 1.0687 at 05:30 GMT, the pair’s highest level since November 17. EUR/USD started trading today at 1.0660.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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