{"id":141097,"date":"2019-02-04T10:45:41","date_gmt":"2019-02-04T15:45:41","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=141097"},"modified":"2019-02-05T08:24:22","modified_gmt":"2019-02-05T13:24:22","slug":"january-nfp-review","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/02\/january-nfp-review\/","title":{"rendered":"January NFP Review"},"content":{"rendered":"
February 4, 2019<\/div>
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By Orbex<\/strong><\/p>\n

Despite initial weakness in response to the\u00a0January FOMC meeting last week<\/a>, where the Fed struck a more dovish tone, USD was able to stage a recovery late in the week.<\/p>\n

This came as the January Non-Farm Payrolls report rang in stronger than expected.<\/p>\n

The January NFP printed 304k, almost double the 165k forecast by the market, bringing the 4-month average to 250k.<\/p>\n

Alongside this, average hourly earnings (annualized) remained unchanged at 3.2%, with both sets of data suggesting that the 35-day government shutdown did not negatively impact labor market conditions.<\/p>\n

Wage Growth Stalled<\/strong><\/h2>\n

The report wasn\u2019t all good news, however, with the month on month wages data rising just 0.1%, its weakest growth rate since February 2018.<\/p>

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However, with annual wage growth still above 3%, a bounce back next month should push the yearly reading up to around 3.5%. Indeed, other survey data sets suggest that labor shortages exist and compensation is increasing consequently.<\/p>\n

Fed\u2019s Beige Bok Highlights Labour Shortages<\/strong><\/h2>\n

The Fed\u2019s own January Beige Book said:<\/p>\n

\u201cWages grew throughout the country\u2026 across skill levels, and numerous districts highlighted rising entry-level wages, as firms sought to attract and retain workers and as new minimum wage laws came into effect.\u201d<\/p><\/blockquote>\n

This echoes the report by the NFIB published in January which showed that more than a third of small businesses are struggling to fill vacancies and are planning to increase compensation levels to new record highs.<\/p>\n

Indeed, the increase in pay is certainly bringing fresh blood back into the workforce. The labor participation rate in January jumped to 62.3%, its strongest level since August 2013.<\/p>\n

This\u00a0helps offset the 0.1% increase in the unemployment rate last month, now back up to 4% from 3% prior.<\/p>\n

Fed Could Raise Rates Again In Summer<\/strong><\/h2>\n

In all, the data was\u00a0positive, which shows that labor market conditions remain solid in the US.<\/p>\n

The current pause in the Fed\u2019s hiking program has been met with disappointment by bulls. However, if data sets continue to show resilience,\u00a0there may be a case for the Fed to return to its hiking program as early as the summer.<\/p>\n

This is especially true if wage growth can bounce back next month and start to feed back into inflationary pressures, bringing CPI higher, and if headlines around the\u00a0US\/China trade negotiations<\/a>\u00a0continue to improve.<\/p>\n

Technical Perspective<\/strong><\/h2>\n

\"USD\"<\/a><\/p>\n

The recent rollover in USD failed to see price break down below the 95.07 which, for now, has acted as support, and helped price potentially create a higher low, suggesting another rotation higher back towards the 96.91 level.<\/p>\n

Until either of these levels is meaningfully broken, price is likely to remain in consolidation mode while the market awaits fresh directional catalysts.<\/p>\n

If price breaks lower from here, the next level to watch is the 93.36 level where we have good structural support at a raft of prior swing lows. Meanwhile to the topside, a break back above the 2018 highs will bring the key psychological level of 100 into play.<\/p>\n

By Orbex<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex Despite initial weakness in response to the\u00a0January FOMC meeting last week, where the Fed struck a more dovish tone, USD was able to stage a recovery late in the week. This came as the January Non-Farm Payrolls report rang in stronger than expected. The January NFP printed 304k, almost double the 165k forecast […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-141097","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/141097","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=141097"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/141097\/revisions"}],"predecessor-version":[{"id":141099,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/141097\/revisions\/141099"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=141097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=141097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=141097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}