Archives: 2007 October

NFP Jobs Report Sends Dollar Higher

The Non Farm Payroll jobs report released this morning by the US Department of Labor quickly sent the Dollar higher in a surge of knee jerk Dollar buying.

NFP jobs were reported at +110,000 for September against an expected +100,000. The eye opener in the report was the revision to the job figure of minus 4000 from last month to a plus 89,000.

While the +110,000 is not a huge number it, along with the revision, was good enough to take USD/Yen to a high of 117.30 soon after the report was released. That was a quick pop of about 85 pips to the upside. USD/Yen has already moved back to 116.90 but the Non Farms Payroll report will likely set a more positive Dollar tone for at least a few days.

The Euro traded as low as 140.33 within a few minutes of the NFP release but has already traded back up to 1.4115.

I would not expect the Dollar strength to last very long. Nothing has changed as to the long term prospects for the Dollar to continue in a pronounced down trend. Any counter trend rallies offer a good opportunity to sell the Dollar.

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The Dollar followed the US stock market higher this week as the Dow made all time highs then paused in front of Friday’s unemployment report.  As the Dollar moved higher from all time lows in the Euro and other currencies the move was probably more of a correction than any sort of turn around.

Since making all time highs the stock market has paused for most of this week as it is waiting for the September unemployment report which will be released tomorrow morning. Economic data released this morning indicates that the data may be on the soft side.

The number of newly laid off workers filing claims for unemployment benefits shot up last week by the biggest amount in four months.

This morning the Labor Department reported a total of 317,000 applications for unemployment benefits last week, an increase of 16,000 from the previous week. It was the biggest gain since jobless claims rose 18,000 during the week of May 9.

The rise was bigger than analysts had expected and could be a further sign that the labor market is slowing under the impact of the worst slump in housing in 16 years and a severe credit crunch that roiled global markets in August.

The stock market may rally on a distressing unemployment report as Fed watchers would guess that the Federal Reserve would continue to lower interest rates in the face of a slowing economy. However, lower rates are not favorable to dollar strength so the long term Dollar downtrend would likely immediately kick in given a less than expected unemployment report.