US Dollar Skyrockets As Fed’s Forward Guidance Looks In Jeopardy

FXOpen

The US Dollar (USD) gained strength on Friday against all the major counterparts following the upbeat economic reports during the Mid-American Session.  Not to mention, the Nonfarm Payrolls and ISM Non-Manufacturing PMI, both came out far better than expectations thus spurring huge bullish momentum in the price of greenback.

eurusdi-h4

The Euro (EUR) slid down broadly against the US Dollar (USD), dragging the price of shared currency to less than 1.2520, the lowest level in about two years. Like was the case with cable which slumped below the 1.6000 milestone for the first time in as many months.

Nonfarm Payrolls

The nonfarm payrolls remained 248,000 last month as compared to 180,000 in August, up beating the average forecast of 215,000 by a long shot. Generally speaking, a higher nonfarm payroll reading is considered positive for the US economy thus a better than expected actual outcome spurred sharp bullish momentum in the US Dollar Index which gauges the value of greenback against the basket of six major peers.

Unemployment Rate

The rate of unemployment remained 5.9% in the US during September as compared to 6.1% in the month before, exceeding the average forecast of 6.1%, a report by the labor department revealed today. The jobless rate figure proved to be a major blow for the Federal Reserve’s forward guidance stance and fueled rate hike optimism among the investment community.

ISM Services PMI

The Services Purchasing Managers Index (PMI) remained 58.6 points in September as compared to 59.6 points in the month before, exceeding the median projection of 58.5 points, a report by the Institute of Supply Management (ISM) said today.

Conclusion

The US Central Bank is very likely to continue the aggressive monetary policy stance in the near future since the US economy is showing solid progress even without the stimulus. 

Trade global forex with the Innovative Broker of 2022*. Choose from 50+ forex markets 24/5. Open your FXOpen account now or learn more about trading forex with FXOpen.

* FXOpen International, Innovative Broker of 2022, according to the IAFT

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 Forex Analysis

Market Analysis: US Dollar On the Rise Despite Weak PMI Data Market Analysis: GBP/USD Nosedives While USD/CAD Aims Higher EUR/USD Analysis: Key Support Zone Resists Selling Pressure USD/JPY Analysis: Rate Reaches Maximum of the Year Market Analysis: EUR/USD, GBP/USD, and USD/JPY

Latest articles

Forex Analysis

Market Analysis: US Dollar On the Rise Despite Weak PMI Data

EUR/USDThe euro fell against the US dollar on Friday as economic data showed a contraction in economic activity, which could prompt European Central Bank hawks to soften their policy stance. Preliminary data indicates a contraction in economic activity in

Financial Market News

Economic calendar: NASDAQ 100 May Keep Falling, High Volatility in Oil Markets, Potential Appreciation of the US Dollar

The US, Japan and the UK may have kept interest rates on hold last week, but with the Federal Reserve indicating that rates will stay higher for longer, there is turmoil in the equity markets. The NASDAQ 100 fell 500

Financial Market News
Indices

Financial Markets Waking Up after a Turbulent Week: Important News

The main event of last week was information from the Fed. Jerome Powell once again demonstrated his determination to maintain a tough political stance, which caused: → increase in bond yields. Yields on 10-year securities reached their highest since 2009; → the

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.