The US Dollar Index today surged 85 pips higher following the release of upbeat nonfarm payroll data, which showed that the country created 263,000 new jobs, beating analysts' estimates of 200,000 new jobs.
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The NFP report also showed that the unemployment rate in the US remained stable at 3.7% while average hourly earnings rose 0.6% in November, outdoing analysts’ consensus estimates of 0.3%.
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One of the currencies affected by the US dollar’s rise was the Canadian dollar, given that the country also released its jobs report today. Canada added 10,100 jobs in November, which was lower than the consensus estimate of 10,500 jobs.
However, Canada’s unemployment rate fell to 5.1%, beating analysts’ estimates of 5.3% and the previous figure of 5.2%. The loonie’s decline was also driven by weak oil prices, as tracked by the West Texas Intermediate, trading flat for the day.
Other currencies, including the euro and the British pound, were also weaker than the US dollar, which clawed back some of its recent losses against its main competitors. The upbeat jobs data give the Federal Reserve ample room to keep hiking rates, although at a slower pace.
The recent change of tone from hawkish to dovish by the Fed has been the primary driver behind the dollar’s overall weakness, with many looking forward to the next rate hike from the Fed in mid-December.
Investors look forward to next week when the Reserve Bank of Australia and the Bank of Canada are scheduled to announce their interest rate decisions. The US Dollar Index is set to end the week trading at a crucial long-term support level.
It will be interesting to see if the index shall drop below the support level next week.
*This is not investment advice.
The US Dollar Index price chart.
The US Dollar Index spiked 85 pips (0.82%) higher to trade at 105.58 after the release of nonfarm payroll data.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.