The U.S. Non-Farm Payroll Report came out worse than expected. Traders were looking for a loss of between 175,000 and 225,000 jobs. The actual number showed a loss of 263,000 jobs. The biggest job losses occurred in construction, manufacturing, retail and the government. Healthcare was positive.
The U.S. Dollar is gaining ground against major currencies except the Japanese Yen. Investors are looking at this report as a sign that the government stimulus plan may not be working. Traders are keeping away from higher yielding assets and seeking the safety of the Dollar.
The Dollar is posting its strongest gains versus the British Pound and the Canadian Dollar. The main trend is down in the GBP USD and traders expect this currency pair to reach 1.5200 before strong buyers step in. The charts indicate plenty of room to the downside. Lower equity and crude oil markets are helping to pressure the Canadian Dollar and boost the USD CAD.
The Euro is also down sharply. Traders are saying that government stimulus is not working and staying away from the more risky assets. The perception is that if the U.S. economy is not on track to recovery then the Euro Zone is not going to improve.
Higher yielding assets like the AUD USD and NZD USD are also under pressure. With these two markets still near their highs for the year, traders believe that its time to book some of the lofty profits that have occurred during the recent six month run-up.
The Dollar is trading lower against the Japanese Yen and Swiss Franc. This could be traders seeking safety in these two currencies.
Traders should not expect the Dollar to go straight up today, but instead should watch for steady upside pressure. Volatility could be high and there may be some violent counter-trend knee-jerk reactions throughout the day.
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