The USD Reverses Course as the NFP Misses Expectations

FXOpen

Last week brought some troubling events in the United States, as protesters took the Capital by assault. Lives were lost, and the nation faces an identity crisis.

Shortly after the order was restored, President Trump recognized President-elect Biden’s victory and ensured people that there would be a peaceful transition of power on the 20th of the month when the new administration takes charge.

But it was too little too late. In the meantime, Twitter suspended the President’s account, and America is on a race to identify each and every one of the protesters.

As such, the economic data paled in the face of the political events. However, the USD did move, as it seems that it reversed course, easing from the highs.

What Did the NFP Show?

The NFP report released last Friday showed the data for the month of December 2020. The U.S. economy lost 140k jobs, much worse than the expectations of adding 60k.

Unsurprisingly, the leisure and hospitality sectors were responsible for most of the job losses, as the pandemic continues to take its toll. However, the November numbers were revised higher, and the unemployment rate remained stable, somehow diminishing the impact of the December report.

ISM Manufacturing Above 60

One of the most striking pieces of economic data released last week was the ISM Manufacturing. It climbed above 60, and most of the time, when it did so in the past, the dollar strengthened in the following one hundred days.

The thing is that all investment houses predict a lower dollar in 2021. Whenever such a consensus exists, the danger is that exactly the opposite happens.

So far, the dollar reflected the risk-on environment, as it moved hand in hand with the U.S. equities. As the new administration prepares to run America, the dollar may be in the grasp of a sharp reversal.

The EURUSD is already down two big figures from the highs, and AUDUSD and GBPUSD correct as well. If the dollar’s strength continues, the world risks being caught on the wrong side of the market, as most traders are positioned for a weak dollar.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Financial Market News

Economic Calendar: US PMI Data, Stock Market Decline, and Oil Surge Britain's Economy: Balancing Act Amidst Gloomy Metrics and Resilient FTSE 100 This Week’s Economic Calendar: US Employment Data, Eurozone Inflation Figures, Canadian GDP Numbers, and Best Buy and Salesforce Earnings Reports Economic Calendar: Jackson Hole Symposium, Nvidia Earnings Report, Canadian Retail Sales Data Economic Calendar: OPEC Report, US Inflation, UK GDP, and China’s Export and Import Data

Latest articles

Trader’s Tools

Momentum Trading Strategies for Day Traders

Momentum trading is a highly-regarded trading strategy used to seize opportunities in trending markets. This article explores momentum trading and offers two comprehensive strategies for capitalising on rising and falling markets. What Is a Momentum Trading Strategy?Momentum trading is

Trader’s Tools

Selecting a Reliable Broker

When it comes to trading and investing, choosing the best online brokerage service is crucial. There are many options available, so it can be difficult to decide which one to go with. To choose wisely, you need to look at

Indices

Market Analysis: S&P 500 Falls amid News from the Fed

Yesterday was an important evening that had an impact on many financial markets. The Federal Reserve (as expected) kept the rate at the same level. According to Powell: → The full effect of tightening the monetary policy has yet to be

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.