US Dollar Slides on Weak NFP Report, EUR Rally
The USD slide on Friday after the NFP report showed the labor market wasn't as strong as analysts expect. Against confident traders angling for the USDX to gain versus major currencies, reports indicated that only the unemployment rate was on the green, dropping to 6.3 percent. Meanwhile, the weekly earnings grew by 0.2 percent, below analysts' forecast of 0.3 percent. At the same time, job addition was nearly half of the economists' predictions. Despite these increments, they were overwhelming, causing the greenback to contract, shedding versus major currencies.
Against expectations, the US labor market is not as robust. Despite the expansion of white-collar jobs, the NFP was the main event last week—and it disappointed traders. Consequently, the greenback islow versus CAD, Euro, and the majors. Still, minor gains can add optimism and help the US economy recover from the doldrums of the coronavirus scourge. A stock market rally combined with the improving bond yields builds into the greenback's strength, a move that may contribute to a USD bull market as the US strongly wriggles out of the pandemic.
Impact on the USD:
Neutral. The greenback might be tracking lower, but analysts expect a recovering labor market to give the US economy a shot in the arm as it wriggles out of the COVID-19 pandemic. Already, St Louis Fed President James Bullard says the US economy will grow strongly in 2021.
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